Making Hay of New IRS Reporting Requirements

News November 8, 2010 • Issue 10:11:01 Industry Update ...... 14 TCF Bank lawsuit challenges Durbin Amendment ...... 43 Making hay of new Reaching out to medical marijuana dispensaries ...... 43 IRS reporting Mercator explains growth in micropayments, virtual purchasing ...... 45 requirements New MasterCard credit card generates passwords ...... 46 By Adam Atlas Trade Association News Attorney at Law WSAA 2010 a smashing success ...... 47 s of Jan. 1, 2011, certain ISOs, acquiring banks, processors and third- Features party payment providers will be obliged to keep track of merchants' gross credit card, debit card and third-party payment (such as those SellingPrepaid: A made through PayPal Inc.) receipts. Prepaid in brief ...... 32 Open-loop prepaid part of These are not the printed receipts from purchases at the POS but those from deposits made by an acquirer or other service provider to a merchant account CTA's new fare system ...... 34 for settlement of electronic transactions. Given that the bulk of income for most Prepaid's emergence in India ...... 36 merchants is derived from credit and debit cards, this reporting makes sense Research rundown ...... 75 from a public policy perspective. Views The reporting applies to merchants who sell more than $20,000 worth of goods and conduct more than 200 electronic transactions annually. Challenges to Dodd-Frank, Durbin heat up By Mark Brady and Ross Federgreen The 1099-K CSRSI, The Payment Advisors ...... 24 Service providers that make direct payments to merchants for their credit and It's the economy, again debit card and alternative payment transactions – dubbed "payment settlement By Brandes Elitch, CrossCheck Inc...... 30 entities" and "third party payers" by the Internal Revenue Service – must report this data to merchants and the IRS yearly via a 1099-K form for each merchant, Education beginning in early 2012 for the 2011 calendar year. And merchants must report this income on their business tax returns. Street SmartsSM What the feet on the street need from acquirers The "payment settlement entity" to which the form refers is whatever party By Ken Musante, Eureka Payments LLC ....58 deposits credit and debit payment settlement money into the merchant's Content marketing delivers account – be it an ISO, acquiring bank or processor. "Third party payers" are by engaging prospects alternative payment companies like PayPal that do not use conventional payment settlement channels and would thus fill out their own 1099-K form in By Peggy Bekavac Olson place of, or in addition to, the one turned in by the company settling traditional Strategic Marketing ...... 62 credit and debit purchases. Going beyond PCI By Tim Cranny, Panoptic Security Inc...... 64 Pursuant to IRS Regulation 139255-08, developed in accordance with the Where is our industry heading? Housing and Economic Recovery Act of 2008 and finalized in August 2010, the reporting will reflect a merchant's gross amount of credit and debit card By Jeffrey Shavitz receipts, before the deduction of chargebacks, returns and refunds. Thus, the Charge Card Systems Inc...... 68 IRS will be able to assess the reliability of merchants' accounting through the Become a payment superhero lens of their most important source of income: acquiring entities. By Jeff Fortney, Clearent LLC ...... 70 The impact on ISOs and MLSs What PCI DSS 2.0 means for ﬁ nancial institutions The implications for ISOs and merchant level salespeople (MLSs) are differ- By Gary Palgon, nuBridges Inc...... 72 ent than those for merchants, of course. And as recently as October 2010, ISO agreements from major processors were being amended in anticipation of the

Continued on page 3 See IRS reporting on page 51

AdvisoryBoard NotableQuote

» Tony Abruzzio–Global Payments Inc. » Andrew Altschuler–AmeriMerchant I have many friends who are just » John Arato–MagTek Inc. now choosing to enter our space; » Adam Atlas–Attorney at Law they wouldn't be doing so if they didn't believe opportunities existed. » Clinton Baller–PayNet Merchant Services Inc. And, if you truly are negative about » Audrey Blackmon–TASQ Technology our business and its future, find a » Robert Christiansen–ARM Loyalty new career. » Steve Christianson–AAmonte Bankcard See story on page 69 » Steve Eazell–Secure Payment Systems Inc. » W. Ross Federgreen–CSRSI » Ed Freedman–Total Merchant Services » Marc Gardner–North American Bancard » Chad T. Gay–PNC Merchant Services Inside this issue: » Russ Goebel–Quantus Health Solutions LLC CONTINUED » Matt Golis–YapStone Inc. » Curt Hensley–Impact Payments Recruiting Company Proﬁ les » Scott Henry–VeriFone Inc. » Jared Isaacman–United Bank Card Inc. Global Electronic Technology Inc. » Kevin Jones–First American Payment Systems » Jerry Julien–Equity Commerce LP Good as it GETs ...... 41 » Lazaros Kalemis–Alpha Card Services Inc. New Products » Dee Karawadra–Impact PaySystem » Rod R. Katzfey–Consultant Encrypting, entertaining self-service terminal ...... 74 » Allen Kopelman–Nationwide Payment Systems Inc. » Mitch Levy–Merchant Cash and Capital Inspiration » Dan Lewis–AmeriBanc National Ltd. » Douglas Mack–Payex The pursuit of happiness ...... 79 » Paul Martaus–Martaus & Associates » Biff Matthews–CardWare International Departments » Sonny McKinney–TransWORKS LLC » Tim McWeeney–Verifone Inc. Forum ...... 5 » Justin Milmeister–Elite Merchant Solutions Datebook ...... 77 » Patti Murphy–The Takoma Group » Michael Nardy–Electronic Payments Resource Guide ...... 80 » Steve Norell–US Merchant Services » Michael Petitti–Trustwave Advertiser Index ...... 94 » Bill Pittman–SoundPOS LLC. Miscellaneous » David H. Press–Integrity Payment Systems » Steve Rizzuto–TransFirst QSGS: Quick Summary Green Sheet...... 8 » Charles W. Salyer–Ladco Leasing Inc. » Jeffrey I. Shavitz–Charge Card Systems Inc. Bottom Lines ...... 14 » Lisa Shipley–Ingenico North America » Dave Siembieda–CrossCheck Inc. 10 years ago in The Green Sheet ...... 76 » Rick Slifka–Exec-Links LLC Water Cooler Wisdom ...... 79 » Anna Soloman–FrontStream Payments Inc. » Nick Starai–Network Merchants Inc. » Theodore Svoronos–Merchant University » Stuart Taylor–Hypercom Corp. » Scott Wagner–GO DIRECT Merchant Services Inc. » Dan D. Wolfe–Teledraft Inc. 4

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The Green Sheet (ISSN 1549-9421) is published semi-monthly by The Green Sheet Inc., 6145 State Farm Dr., Rohnert Park CA 94928. Subscription is FREE to participants in the payment processing industry, an annual subscription includes 24 issues of The Green Sheet and 4 issues of GSQ. To subscribe, visit www.greensheet.com. POSTMASTER: send address changes to The Green Sheet Inc., 6145 State Farm Dr., Rohnert Park CA 94928. Any questions regarding information contained in The Green Sheet should be directed to the Editor in Chief at [email protected]. Editorial opinions and recommendations are solely those of the Editor in Chief. In publishing The Green Sheet, neither the authors nor the publisher are engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The Resource Guide is paid classiﬁ ed advertising. The Green Sheet is not responsible for, and does not recommend or endorse any product or service. Advertisers and advertising agencies agree to indemnify and hold the publisher harmless from any claims, damage, or expense resulting from printing or publishing of any advertisement.

A request from academia nals and equipment you can offer and support, the more variety you offer and the more appealing you become. I'm working on a thesis dealing with the electronic pay- Also, offering different pricing programs and options for ment industry and have three questions I've been unable to equipment, such as buying it outright, leasing, paying answer through other research channels. I was hoping you for it monthly, or getting it free (based on parameters), could help me. The questions are: is also helpful.

1. What is the basis of competition between ISOs? 2. Yes, an ISO that offers gift and rewards programs can potentially capture more market share. These products 2. Are gift card/rewards program services potentially a are important to many merchants and drive customer large competitive differentiation? retention, customer loyalty, marketing and cross-marketing efforts, and more frequent and larger transactions. 3. What other sorts of competitive differentiation are there? 3. Other sorts of competitive differentiation include: Jon Schneider University of Dayton • Additional services: These go from the basics to the next step and include check services, risk mitigation Jon, services (to fight chargebacks), chargeback insurance, consulting services or any service offered to strengthen I referred your questions to Theodore Svoronos. He is a relationships and add more value. Also, offering prod- member of our advisory board, as well as co-founder of ucts that pertain to the merchant service industry such Merchant University, which provides educational informa- as connectivity, accounting software, web hosting and tion on the payments industry at www.merchantuniversity. development, etc. The key is to offer a well-rounded org. He graciously provided the following: menu of products and services without using a shotgun approach. Become the organization that can be con- 1. The fundamental areas shaping competition among sidered a one-stop shop, a true resource for merchants. ISOs are: • Customer service and support: Merchant services • Price: Price used to be the differentiator a long time is customer service. Good customer service can keep an ago. This has changed since most ISOs can offer simi- ISO's current relationships and foster new ones. Or it lar, competitive pricing. So it evolved from price only to can be a big factor contributing to an ISO's attrition price and equipment (discounted, leased or free) and rate. In any facet of business, once a relationship has now to price, equipment, contract length, additional fees been established an organization must properly main- and customer service as a basis of discussion. Though tain the relationship with swift customer service, knowl- price is still a leg in the foundation of differentiation, edgeable individuals, professionalism and an eager, these other factors are coming in strong and are carry- helpful attitude. Communication is central to customer ing their own weight when comparing ISOs. service and, if used correctly, can establish, strengthen and save relationships. • Additional fees: An ISO could have the lowest price but could charge the following: cancellation fee, • Credibility: Another difference between ISOs can gateway fee, yearly fee, monthly fee, statement fee, be their credibility or perceived credibility, market expo- support fee and other miscellaneous fees. Other ISOs sure and reviews. When comparing ISOs (which should may charge some, all or none of these fees to get the be on the to-do list of everyone considering working with business. one), looking at their reviews, knowing or having heard of certain companies, and asking what kind of experi- • Contract length: Some contracts are 36 months; ence others have had with them can play a big part in others can be month to month, yearly, etc., with no the decision-making process. The industry is evolving, early cancellation fees or penalties. Some ISOs have the and more merchants, salespeople and partners are flexibility to change the contract length, which is also a becoming educated and doing their due diligence. factor. I hope these answers provide all the information you need. • Equipment: Equipment is integral to ISOs' offerings and is determined by what they can support, based on Editor their bank(s) and platform(s). Obviously, the more termi-

A quick summary of key articles in this issue to help keep you up-to-date on the latest news and hot topics in the payments industry.

1 34 Cover Story Feature Making hay of new IRS Open-loop prepaid part of reporting requirements CTA's new fare system Service providers that make direct payments to merchants The Chicago Transit Authority, which oversees a monthly to settle electronic transactions will soon be required to mass transit ridership of over 40 million, said it is moving report this data to merchants and the IRS. This article forward on a new "open" electronic-fare ticketing system examines how the new rules will affect everything from that will use contactless credit, debit and prepaid cards. Is culpability for tax evasion to merchant portfolio valuations, this a step toward a much broader, interconnected card- as well as how the requirements present new opportunities based payment network for mass transit? to ISOs.

24 43 View News Challenges to Dodd-Frank, TCF Bank lawsuit challenges Durbin heat up Durbin Amendment With the Federal Reserve mandate from Congress to estab- TCF National Bank, a subsidiary of TCF Financial Corp., lish debit interchange rates by second quarter 2011, two filed a lawsuit challenging the constitutionality of the challenges to federal regulation of the payments industry Durbin Amendment. The suit claims Congress neglected have recently been filed. Who is most likely to gain some- to hold hearings on the amendment before including it in thing from these fights, and who stands to take a loss? the Wall Street Reform and Consumer Financial Protection Act of 2010.

30 43 View News It's the economy, again Reaching out to medical In today's economy, people have fallen out of love with marijuana dispensaries buying stuff. For ISOs and merchant level salespeople Despite discrepancies between federal and state laws that (MLSs), this is particularly important because you get paid are complicating the sale of medical marijuana, a handful on the clicks that happen when somebody buys something of payment processors are approaching dispensaries with from one of your merchants. The truth is we're in a difficult offers involving payment acceptance equipment and loy- cycle, where troubles in one area of the economy tend to alty programs. weigh on another.

QSGS

45 58 News Education Mercator explains Street SmartsSM: What the growth in micropayments, feet on the street need virtual purchasing from acquirers

A recent webinar hosted by Mercator Advisory Group dis- Street-level ISOs are much closer to merchants than acquirers. cussed the spread and standardization of new types of online However, acquirers obtain information directly from the card micropayments happening in line with a burgeoning market networks and processors that street-level ISOs and MLSs rely for virtual game-based digital content. According to Mercator, on acquirers to announce and explain. In this article, industry many game vendors are involved in or considering revenue- observers consider ways that ISOs and MLSs can work with sharing arrangements with social networking sites. acquirers to optimize customer service.

47 62 News Education Trade Association News: Content marketing delivers WSAA 2010 a smashing success by engaging prospects If you haven't attended one of the regional acquirer trade- Traditional marketing is based on interruption methods shows recently, you may want to add it to your to-do list using marketing materials and tactics to interrupt buy- for next year. The Western States Acquirers Association ers' activities to gain their attention and their business. held its annual show Oct. 13 to 14 in La Jolla, Calif., and it Examples of interruption marketing are promotional bro- was one to remember. chures, emails, advertising and sales calls. Content marketing is based on the art of communicating without selling. What, exactly, does that entail? 12

QSGS

64 72 Education Education Going beyond PCI What PCI DSS 2.0 means The Payment Card Industry (PCI) Data Security Standard for financial institutions (DSS) is expanding and maturing. That means ISOs, banks, Version 2.0 updates to the PCI DSS and the Payment MLSs and merchants must familiarize themselves with Application DSS bring no major changes in requirements, an increasing number of resources, documents, processes a sure sign these security standards are maturing. The and procedures associated with PCI. That's good in almost updates do devote significant new text to clarifying the every way, but it introduces one very real danger. standards, but there's still room for improvement.

70 79 Education Inspiration Become a The pursuit of happiness payment superhero When Thomas Jefferson penned the forward-thinking As ISOs and MLSs, your external identity is crucial to your words contained in the Declaration of Independence, he customers and prospects. Fortunately, this identity is some- officially declared the "pursuit of happiness" as an "inalien- thing you can shape. The key to projecting the right level of able right" for Americans, in the same league as life and self-confidence is respect. Treat all merchants you come into liberty. But happiness is not guaranteed and is often fleet- contact with as true equals. ing. So how do we pursue happiness, especially in the workplace?

14 IndustryUpdate Proudly sponsored by

NEWS September card spending shows growth over 2009

Smart Card Alliance offers CSCIP training Payment card spending grew 7.6 percent in dollar volume, year over year, for September 2010, according The Smart Card Alliance will hold its first international to First Data Corp.'s SpendTrend analysis. September Certified Smart Card Industry Professional preparation transaction growth was 9.2 percent above the level for course and exam at the CARTES & IDentification event September 2009. Merchants lowered prices to generate in Paris. The course will take place on Dec. 6, 2010, sales, SpendTrend noted. The data includes credit, debit followed by the exam on Dec. 9. CSCIP denotes profes- and electronic benefits transfer card use at U.S. retailers. sionals with advanced levels of industry knowledge and experience who have passed the multipart exam. VisaNet now open to independent developers "CSCIP is a strong credential for any individuals or organizations to have to set themselves apart as industry Visa Inc. recently opened its payment network, VisaNet, experts," stated Randy Vanderhoof, Executive Director to independent developers via its Authorize.Net of the Smart Card Alliance. Developer Center.

Course content has been updated on international "An enhanced Authorize.Net Developer Center pro- standards and global implementations. The training vides a complete platform, tools and community for includes nine topics, including the following usage independent developers and is built on the existing solu- models: identity and security; payments and finan- tion platform from Authorize.net, which Visa acquired cial transactions; and mobile, near field communica- as part of the purchase of CyberSource earlier this year," tion (NFC) and pay TV. For more information, visit Visa revealed in a written statement. "The combination www.smartcardalliance.org/pages/activities-leap. of developer ideas and Developer Center tools will result in the rapid development of innovations that will Coalition to boost improve the payment experience for cardholders and electronic payroll adoption deliver more efficiency and profitability for developers, merchants and financial institutions." Located at http:// NACHA – The Electronic Payments Association, developer.authorize.net, the center is free to all developers. the Association for Financial Professionals, and the American Payroll Association formed the Electronic Payroll Coalition to promote the adoption of electronic ANNOUNCEMENTS payroll technology. The coalition will trumpet the benefits of using both direct deposit and payroll cards. ACI Worldwide celebrates milestone and merges JV NACHA President and Chief Executive Officer Janet O. Estep stated, "Quite simply, electronic payroll is the safe, Payment systems provider ACI Worldwide Inc. smart and green way to be paid, providing efficiencies marked its 35th anniversary. The company has 750 for both the employer and the employee." customers in nearly 100 countries. Additionally, the

• Richard K. Miller & Associates' The 2010 Leisure Market Research Handbook, available through MarketResearch.com, estimates annual spending in the U.S. leisure market is $2.4 trillion. By 2015, analysts expect over half the U.S. gross national product will be generated by 65 discretionary income spending segments in entertainment and leisure.

• A ChannelAdvisor Corp. white paper titled Holiday Crunch Time: Last-Minute Quick Tips for Amazon, eBay and Buy.com, correlates smart phone mobile-optimized website and barcode searches to recent growth in mobile shopping, with Amazon.com reporting $1.5 billion in product sales via mobile devices since January and eBay Inc. projecting $1.5 billion for 2010.

• The National Retail Federation's Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, predicts the average U.S. consumer will spend $688.87 this holiday season, up 1 percent from $681.83 last year. Of those surveyed, 81.5 percent plan to spend less this year; 40.6 expect to use coupons; 30.9 percent indicated they would comparison shop online.

IndustryUpdate

company merged ACI Soluciones, its joint venture with recognizes success in sustaining growth within its mar- processor 4B, into ACI's Spanish operations. ket by increasing sales and profitability. CardinalCommerce granted patent Protegrity joins PCI Council

CardinalCommerce Corp. received a patent from the Protegrity Corp., a data security software developer, U.S. Patent and Trademark Office for its Centralized joined the PCI Security Standards Council. Protegrity's Identity Authentication for Electronic Communications software performs end-to-end encryption, tokenization Networks. It is CardinalCommerce's seventh patent and and monitoring. reportedly protects the company's methods and technologies related to secure informational and transactional ISO executive Reis wins UBC drawing exchange using authentication. The company submitted Nathan Reis, owner and CEO of ISO The Program LLC, the application in 2000. which does business as Entrust Bankcard, won a contest Italian banking association held by United Bank Card Inc. Sales partners of UBC certifies Hypercom terminal were eligible to win the $1 million prize by submitting eligible deals. The winner was randomly selected by an The Italian card association Consorzio Bancomat cer- independent auditing firm. tified the Optimum T4200 payment terminal from Hypercom Corp. Hypercom complied with the associa- PARTNERSHIPS tion's new EMV CB 2 standard. The association represents Italy's banks. Allpoint expands into Australia Trustwave takes home Allpoint Network, an affiliate of Cardtronics Inc., part- Frost & Sullivan award nered with Customers Ltd. to expand the Allpoint ATM Technology consultancy Frost & Sullivan awarded the network by 5,000 locations in Australia. With the agree- 2010 Growth Leadership of the Year Award for managed ment, Allpoint provides access to 40,000 ATMs across security services providers to Trustwave. The award the United States, the United Kingdom and Australia. Cambridge Trust turns to SVP

Cambridge Trust Co. adopted an online payment network from Secure Vault Payments. Developed by NACHA, SVP provides merchants with real-time authorization of automated clearing house transactions. Shazam looks to Cardinal for e-commerce

CardinalCommerce is supplying e-commerce PIN debit services to issuer clients of the Shazam debit network. Internet-based PIN debit transactions take place through the Cardinal Centinel Universal Merchant Platform. Apple-friendly app works with MagTek readers

Payment gateway eProcessing Network LLC developed an Apple Inc.-friendly software application that works with the iDynamo card reader from MagTek.

The EPNMobile app operates on iPhone, iPod and iPad devices in conjunction with the card reader to secure card-present transactions for mobile merchants. Failsafe turns to SecurityMetrics

ISO Failsafe Payments N.A. adopted Payment Card Industry (PCI) Data Security Standard (DSS) compliance services from SecurityMetrics Inc. The data security provider assists Failsafe merchants with self-assessment questionnaires and other requirements.

IndustryUpdate

Fairwinds expands relationship with STAR

Fairwinds Credit Union of Orlando, Fla., named First Data Corp.'s STAR network its preferred provider of PIN debit POS and ATM access, with First Data providing the card processing. Retailers re-up with Fifth Third

Three major retailers renewed multiyear processing contracts with Fifth Third Processing Solutions LLC. The retailers include Wendy's/Arby's Group Inc., Beall's Inc. and Luby's Inc. Greenwise deploys ID TECH devices

ISO Greenwise Bankcard LLC implemented POS sig- nature capture devices from ID TECH for Greenwise's Green Receipt and DonateWiseNow programs. The devices are expected to lower the program-entry barriers for small to midsize merchants. Little Caesars restaurants pick Heartland

The Independent Organization of Little Caesars Franchisees endorsed Heartland Payment Systems Inc. as its provider of card processing and payroll services. The organization comprises 900 restaurant locations in the United States. BHI SecureConnect assists Lighthouse Software

Lighthouse Software Development Inc. now uti- lizes SecureConnect vulnerability scanning services from BHI Advanced Internet Inc. The scanning services for PCI vulnerabilities are available to clients of Lighthouse, which provides software services to the payments industry. PPI partners for mobile payments

Payment Processing Inc. integrated its PayMover hosted payments platform with the Mobile X POS system from New West Technologies Inc. for payment processing on handheld devices. The Mobile X received validation to the Payment Application (PA) DSS. Prime Dine selects Precidia's TransNet

The TransNet payment engine from Precidia Technologies Inc. was integrated with the Crystal Point restaurant POS system from Prime Dine Systems. The TransNet software provides PA DSS- validated payment processing. Sage and Ingenico address SMB market

Sage Payment Solutions teamed with Ingenico S.A. to market an integrated payment product for small and midsize businesses. Sage customers may use

IndustryUpdate

Ingenico's card terminals with Sage Exchange – a PA well as swipe bankcards to pay for cab rides. DSS-compliant payment platform. VeriFone also plans to integrate PayPal Inc. pay- Illinois picks Trustwave security ment acceptance with VeriFone's PAYware Mobile card encryption sleeve for the iPhone. The move expands Two institutions became clients of Trustwave. Illinois PayPal acceptance in mobile applications. After integra- State University is using Trustwave to secure its infor- tion, VeriFone will promote PayPal and its Bump tech- mation technology (IT) labs, giving IT faculty and nology to the VeriFone reseller channel. And PayPal will students access to production-level technology. Also, market VeriFone's PAYware Mobile to its users. Bump Euroline, the card acquiring unit of SEB Kort AB, part- enables iPhone users to touch phones together to trans- nered with the security service provider to help its Level fer money between them. 3 and 4 merchants comply with the PCI DSS. ViVOtech works with Bell ID, Teletech Food distributor opts for 3Delta tokenization ViVOtech partnered with Bell ID to provide trusted service manager (TSM) mobile applications for NFC U.S. Foodservice Inc. chose an integrated payment handsets. Bell ID markets card-lifecycle and key man- system and CardVault tokenization service from 3Delta agement systems. The partnership enables third-party Systems Inc. to safeguard credit card data. The com- processors and financial institutions to implement NFC pany distributes food to 250,000 customers. TSM systems. In other ViVOtech news, United Arab VeriFone cozy with Atlanta cabs, PayPal Emirates-based Teletech Middle East will deploy a TSM and over-the-air provisioning platform from ViVOtech Atlanta Checker Cab Co. Inc. began installing passen- Inc. together with ViVOtech's NFC mobile payment ger-activated MX 870 payment terminals from VeriFone wallet software. The technology enables Teletech to Inc. The 200-vehicle fleet reportedly is the first to provide an NFC add-on mobile payment service for the employ an integrated payment and information system Middle East that allows cardholders to download credit, that enables passengers to watch streaming media as debit and prepaid cards over the air to smart phones. ACQUISITIONS

Equifax buys Anakam

Credit data supplier Equifax Inc. acquired Anakam Inc., a developer of multifactor authentication software. The merger enables Equifax to provide an integrated, cloud-based platform for two-factor identification.

Anakam was founded in 2004 and was recently recognized by Inc. magazine as one of the fastest-growing private companies in the United States. FIS acquires Capco consultancy

Fidelity National Information Services Inc. (FIS) agreed to buy global technology consulting firm Capco, the trade name of The Capital Markets Co. NV.

Capco is focused solely on the financial services industry. FIS will pay $290 million in cash. The deal is expected to close by the end of 2010. APPOINTMENTS

Credit Cash hires Boutte

Credit Cash LLC appointed Stephen J. Boutte Senior Credit Manager. Boutte previously held managerial roles at EVO Merchant Services Inc., Cynergy Data LLC, Swipe Payment Solutions LLC and First Data.

IndustryUpdate

MCC appoints four to VP positions Senior Recruiter with Kingery & Associates. Merchant Cash & Capital LLC appointed four manag- iPayment names Monaco CFO ers to positions of Vice President. Receiving promotions were Zachary Chasin, Underwriting; Rory Crawford, Mark C. Monaco joined iPayment Inc. as Chief Financial Risk; Nick Gregory, Operations; and Seth Broman, Officer. Most recently, Monaco was Head of Principal Business Development. Investments at Brooklyn NY Holdings LLC. Foley joins JR's POS Depot Ingenico moves Schulz up the ladder

JR's POS Depot named Tom Foley Director of National Ingenico appointed Matthias Schulz Chief Technology Sales. Foley previously worked at Thales, Hypercom Officer and member of the Management Board. and Way Systems Inc. Schulz had been Chief Information Officer at Ingenico's JHA's Foss elected to head AFT easycash unit. David Foss, President of the ProfitStars division of Jack Swenson to lead IT at NxGen Henry & Associates Inc., was elected President of the Association for Financial Technology at the organiza- Merchant service provider UK NxGen Payment Services tion's annual meeting in September 2010. Foss has been promoted Joseph Swenson to CIO. He joined the a member of the AFT board for three years. company in 2004 and was promoted in 2007 to Vice President of IT. Fleet One adds two execs EPX hires banker Towns Fleet One LLC added two executives to its management team. Matt Lattin was named Vice President of Product Electronic Payment Exchange hired Karl A. Towns Management. Previously, he had been Vice President as Executive Vice President. A former bank president at Voyager Fleet Systems Inc. Laila Sotoodeh joined and CEO, Towns will direct EPX's banking alliance the company as Corporate Recruiter. She had been strategy.

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transactions. The amendment directs the Federal Reserve Challenges to to measure the processing costs of authorizing, clearing and settling debit card transactions and then to adopt Dodd-Frank, regulations setting debit card interchange rates based on Durbin heat up those costs alone. On Sept. 13, 2010, the Federal Reserve sent a survey to By Mark Brady and Ross Federgreen issuers, processors and acquirers of debit transactions to CSRSI, The Payment Advisors gather this cost information. The survey was due to be completed and returned to the Fed by Oct. 12. ith the Federal Reserve mandate from Congress to establish debit interchange The Durbin Amendment also addresses other noncom- rates by second quarter 2011, two chal- petitive aspects of card issuance and acceptance rules. W lenges to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act and the Durbin Following is a discussion of these challenges to Dodd- Amendment have recently been filed. Frank/Durbin. First, American Express Co. is contesting the U.S. The AmEx challenge Department of Justice (DOJ) lawsuit that would require AmEx to cease prohibiting merchants from providing As stated, AmEx is fighting the DOJ lawsuit that requires discounts to customers using other card brands or some MasterCard Worldwide, Visa Inc. and AmEx to cease other payment forms. Second, TCF Financial Corp. filed prohibiting merchant discounts to customers using other a lawsuit challenging the constitutionality of the Durbin card brands. Amendment. The DOJ recently reached a settlement with Visa and The Durbin Amendment orders the Federal Reserve MasterCard regarding the companies' allegedly anti- Board to enact regulations that strictly limit the amount of competitive practices. The lawsuit against AmEx is ongo- interchange fees banks can charge retailers on debit card ing, and the issue involves MasterCard, Visa and AmEx rules requiring that merchants must agree not to provide discounts to customers using other card brands. The government argues this strategy by the networks is bad for competition.

The Durbin Amendment already forbade some of these practices by stopping credit card networks from blocking discounts for other forms of payment like cash or debit. The DOJ goes further in allowing discounts for competing brands like Visa, MasterCard or PIN debit. So while the Dodd-Frank/Durbin bill already provides vendors the option of offering a cash discount, they can also now offer a discount to persuade the cardholder to use any other card brand.

AmEx Chairman and Chief Executive Officer Kenneth I. Chenault wrote in an Oct. 8 Washington Post op-ed that the DOJ's civil antitrust case does nothing for consumers and will eventually lead to less competition.

Mr. Chenault's contention is the government's remedy would allow merchants who sign AmEx contracts and post AmEx signage to ignore the AmEx contract's ban on discrimination by pressuring shoppers to use a different card when they pay. AmEx cardholders might be offered a small discount for paying with MasterCard or Visa, but this will not lead to lower prices overall for consumers, according to Mr. Chenault.

"Merchant associations won't commit to lower prices," he stated. "Nothing in the government's lawsuit requires them to do so. As it is, merchants are already allowed to 25

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AmEx executives are likely hoping the company's smaller market share will bolster its argument to the DOJ that its policies aren't anti-competitive. offer a discount or incentive to customers who pay by The TFC challenge cash, checks or debit cards. Very few do." The TCF National Bank (a subsidiary of TCF Financial Chenault also said AmEx is the smallest card brand in Corp.) lawsuit filed Oct. 12 against the Federal Reserve terms of merchant acceptance, but it is "a network of challenges the constitutionality of the Durbin Amendment. choice" in that merchants are under no obligation to do business with AmEx. "Those that do, appreciate our TCF Financial Corp. is a Wayzata, Minnesota-based bank overall service and value, including more business from holding company with $18 billion in total assets. The higher-spending customers who carry our cards," he company has 441 banking offices located primarily in the wrote. "In return, we require that they not discriminate Midwest. TCF hosted a teleconference on Oct. 12 to elabo- against our card." rate on the reasons it chose to file this suit and to further explain the legal basis for the complaint. According to Chenault, almost all AmEx customers carry another card in their wallet, but most consumers Following are some of the issues addressed on the call by carrying cards branded by Visa or MasterCard do not William Cooper, TCF Financial Chairman and CEO: carry AmEx cards. • Cooper argued that processing costs for "debit" Thus, it is "possible to pressure our customers toward one transactions are only a fraction of the total costs of the backup products they carry deeper in their wal- required to manage the debit card system and let," he wrote. "If the government is allowed to do away deliver the product. The Durbin Amendment with the protections we build into our merchant contracts, the net result would be more business for the two domi- nant networks," which, he added, control 70 percent of the market.

He feels that if Visa and MasterCard gain an even greater market share, negotiating "freely or fairly" with them would be impossible, which would result in "higher costs for merchants and less value for consumers."

We can see how AmEx is concerned about the DOJ lawsuit. It might not be unusual, for example, to see a restaurant offer half-price desserts if you pay with your Visa card, or that free hammer at your local hardware store for every purchase over $100 paid with your MasterCard.

Most likely to gain from this fight are Discover Financial Services, because it is not named in the suit, and merchants. Retailers will probably provide incentives for people to use payment options with lower MasterCard and Visa interchange fees that may result from Dodd- Frank/Durbin. A half-price dessert will cost a restaurant less than the merchant discount difference between MasterCard and Visa and AmEx, especially if a few extra espressos are ordered.

AmEx executives are likely hoping the company's smaller market share will bolster its argument to the DOJ that its policies aren't anti-competitive. AmEx also is probably pulling for pro-business Republicans to gain in Congress in the mid-term elections (which, as of this writing, have not yet occurred). 26

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Cooper believes the Durbin Amendment confiscates TCF's assets by denying the bank an opportunity to earn a fair rate of return on its assets.

mandates that the Federal Reserve ignore other hamburgers. To stay in business, the restaurateur costs incurred by banks associated with debit has to sell burgers at prices that cover more than card processing. Those costs include creation and the cost of meat and buns; it also has to cover the administration of their system for establishment of cost of paying employees who make and serve customer checking accounts, including the costly hamburgers, the cost of the building leasing and physical bank branch system. maintenance, as well as the costs of advertising and product promotion. • The Durbin Amendment applies only to banks like TCF with $10 billion or more in assets which, Under the Durbin Amendment, TCF only gets according to Cooper, constitutes a small percent- to recover the cost of the meat and bun. Cooper age of banks in the country and exempts all others. believes the Durbin Amendment confiscates TCF's The thousands of exempted banks will be free to assets by denying the bank an opportunity to earn continue to charge retailers the current debit card a fair rate of return on its assets. interchange rate and recover all their cost plus a profit. This will result in a competitive disadvan- • Congress has never enacted, without hearings, any tage for banks like TCF that are subject to the new regulatory statute like the Durbin Amendment regulations. before, which requires an administrative agency to order sellers of a product or service to cut their • Cooper compared debit card services to selling rates below their actual cost of delivering the product or service.

• The amendment exempts a high percentage of sellers from the new interchange rate (about 7,000 banks, according to Cooper) and applies it to only about 90 banks.

• The Durbin Amendment was a last-minute addition to the Dodd-Frank Act's comprehensive over- haul of the financial services industry. Neither the Senate nor the House held any hearings on the provision, which would have allowed for public analysis of its most questionable provisions. According to Cooper, the $10 billion floor for banks was an unfair, politically based threshold. Congressional opposition decreased as the exclu- sionary amount increased.

• TCF's position is that political control in Congress may shift after the upcoming congressional elections, and Dodd-Frank may be readdressed. November mid-term election forecasts are that at least the House will likely return to GOP control. It appears TCF feels the suit will fare better in Republican hands. Its lobbyists are very likely at work as we speak.

• Cooper stated that TCF discussed the suit with other banks, and these banks may file an "amicus brief" with the court. This type of brief is filed by a party (but not a party to a case) that volunteers to offer information to assist a court in deciding a matter before it.

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Sen. Richard Durbin issued the following statement in response to the TCF who were getting nickel and dimed lawsuit: by the anti-competitive interchange system set up by big banks and "TCF's complaint not only fundamentally misunderstands the law regarding credit card companies – including interchange fees, but it also ignores the facts. The law in no way addresses the TCF. I look forward to this provision's fees TCF, or any other bank, can charge and it does not set interchange rates. day in court and am confident that our Our language simply ensures that debit interchange fees charged to retailers language will be found to be fair and by the card networks – not the banks – are 'reasonable and proportional' to the constitutional." cost of processing transactions and provides competition in an area of the market where there's none. Congress approved this language by a wide bipartisan The legislation's path forward margin in reaction to the frustrations of millions of merchants and consumers Upon receipt of the surveys, the Federal Reserve must consider a number of factors, including the similarities between debit and checking account costs, and distinguish between incremental costs incurred by issuers, such as the cost of authorization, settlement, clearance, fraud and data security. To prescribe standards for assessing whether debit interchange fees are "reasonable and proportional" the Fed must go through several steps.

First, the agency has to gather and analyze the information necessary to determine the cost frameworks. Then it must publish and distribute a draft regulation that is recorded in the Federal Register.

Then, according to the Administrative Procedure Act, the Fed must afford reasonable notice and opportunity for the public to comment. Given the short nine-month time frame for final legislation, this will probably be a 30- to 90-day comment period.

We can assume there are going to be many comments, some highly detailed and contentious. Assuming issuers believe the Fed will set rates too low, issuers are likely to introduce detailed economic analyses of the Fed data to support that contention. The Fed will then likely have much work to do in the few remaining months before it issues the final regulation. Mark Brady is a Team Member at CSRSI, The Payment Advisors, a leading electronic payment consultancy specifically focused on the merchant. You can reach him by email at [email protected] or by phone at 866- 462-7774, ext. 5. Ross Federgreen is founder of CSRSI, The Payment Advisors. He can be reached at 866-462-7774, ext. 1, or rfedergreen@ csrsi.com.

View It's the economy, again By Brandes Elitch bubbles exist in fixed income, commodities and emerging CrossCheck Inc. markets. The long road to recovery ast night I dreamed it was still the 1990s. Life was good. The economy was booming. I was As the analyst Bob Prechter said, "We've had a whole thinner. My colleague in the next cubicle quit decade of investment insanity, and in the last decade L her job to work in the stock market and do day- people fell in love with buying." For ISOs, this is a particu- trading, whatever that was. larly important issue, because you get paid on the clicks that happen when somebody buys something from one of The biggest question in Washington was how to spend your merchants. If consumers aren't buying, you don't get the federal budget surplus. I was about to call "WaMu" paid. But you knew that already. or "Indy Mac" for one of those liar-loan, no-doc, home equity refis so I could do just one more cash-out and buy So, if you are an ISO or merchant level salesperson, what another car. are the implications for your future revenues? Some people, like investment manager Ken Fisher, are optimistic. But then I woke up, and I could tell I was living in the present. All that stuff from the 1990s was gone – the He said, "The next 10 years are going to be just as good unbridled optimism, the budget surplus, my 401k, the as the 1990s. The problems in this environment we equity in the house, my line of credit – well, you get the think are so different and so new and so unique … it's the picture. And I had put on a few pounds. same, stupid, old normal we've always had. We've got a great future." Today, the biggest question in Washington is, when is the economy going to come back? The tech bubble Fisher feels that skepticism and pessimism are normal morphed into the real estate bubble, and now potential sentiments for investors 18 months after the bottom of a bear market. In the 1990s, the Standard & Poor's 500 Index climbed for eight of the 10 years, including five consecu- tive annual gains of at least 19.5 percent.

Unfortunately, the reality is that we're in a cycle. Here is a succinct explanation from writer William Galston: "As the value of assets used as collateral collapses, so does bor- rowing. This depresses consumption, and the real economy dips, making it harder for businesses and households to service the debts incurred during boom times.

"Consumption remains sluggish until debt is reduced to a level that can comfortably be serviced out of current income, a process that cannot proceed without an increase in the household savings rate. The larger the debt over- hang, the longer it will take to work off the excess."

Some economists estimate this could take 10 years. Democrats believe the economy needs more stimulus; Republicans feel it needs lower taxes and less regulation. Meanwhile, consumers are not buying.

They are so spooked by the current unpleasantness that they have curtailed credit card usage, substituting debit for credit and paying down credit card debt with a ven- geance.

This will take a big bite out of the card issuer's profits. Moreover, the economy needs 100,000 new jobs a month just to absorb entrants to the labor force. With more than 15 million people out of work, even a strong recovery will leave a large number of people on the sidelines for years. 31

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And no one can predict what job growth will be over the businesses. Corporate cash in the bank is at an all-time short term. high of around $2 trillion, but businesses are loading up on cash and not spending it. This is not a virtuous cycle. International pressures

Traditionally, three sectors create economic expansion: For the economy to grow, productivity needs to grow. That automotive, construction and financial. As a car collector, is what boosts economic growth and living standards. The I follow what goes on in Detroit. And what has happened big increase in productivity began in the mid-1990s, when in the auto industry is especially pernicious. productivity growth (the growth in goods and services for a given level of input) rose at 2.8 percent a year – double I am reading a book called The End of the Free Market: Who the rate during the preceding 22 years. Wins the War Between States and Corporations? The author, Ian Bremmer, documents the rise of state capitalism and While economists disagree on why this happened, a its threats to the global economy. Nowhere is this more in consensus is that it was due to the increased use evidence than in Japan's approach to the American auto- of information technology (IT) capital, and the rate of mobile market. improvement in the efficiency with which our economy produces IT capital. I have a hunch that some of the cur- Guided by the official policy of full employment for all rent innovations we see in the IT sector will boost produc- Japanese workers, the Japanese government manipulated tivity again. the value of the yen and encouraged manufacturers to dump cars in the United States for most of the 1960s and I see new products in the payments space that, I believe, 1970s at prices cheaper than they sold for at home – until will bring big changes in payments soon, and they will they could build a dealer network and get market share benefit both merchants and consumers. here. New perspectives

Recently, states lacking strong unions threw in billions Sonoma County writer Michael E. Duffy said that in the of dollars worth of concessions (free land, utilities, tax midst of all our technical innovations in the payment sys- abatements, etc.) so Japanese companies could build local tem, "it's easy to forget that there's no economy without plants in the United States and avoid tariffs. However, people. The trading of goods and services has a purpose manufacturing comprises less than 20 percent of the price that sometimes seems overlooked as we envision our of a car; meanwhile, the profits are all repatriated to Japan. brave new world.

Of course, this example is mild compared to today's "Quite simply, we need to feed, house and clothe our- state-owned companies (in China, Russia and the Arab selves, and to do that, we perform work in exchange for monarchies, for example) that control the markets for oil, money. … What worries me most about the future is that aviation, shipping, power generation, arms production, work is disappearing. There are only so many jobs for telecoms and more. people without advanced training and stellar talent."

These governments own enormous investment funds, By now, you might be asking when economists became which are now important sources of capital and threaten sociologists. For perspective, keep in mind that in 1979, American economic stability. This does not bode well for right at the beginning of the 18-year run of bull markets, the auto industry and for U.S. industry in general. Business Week ran a cover story called "The Death of Equities," predicting a long-term bear market. It's hard to The plugged money supply take Business Week seriously after that. Home building will not recover until the inventory of short sales and foreclosures is worked off – probably at Things are not always what they seem. There are least three years away. And many borrowers, including silver linings, even in a recession. For instance, here small business owners and investors, who should be able in Wine Country, we say, "With money tight, and to refinance or buy homes can't do so. French oak at $1,100 a barrel, we're gonna get a lot less oaky wine – and that's a good thing." So it's not all bad. Either they cannot meet new, onerous underwriting rules Stay tuned. or they are impeded by rate penalties for non-FHA or Brandes Elitch, Director of Partner Acquisition for CrossCheck VA loans. Conventional lenders are dependent on Fannie Inc., has been a cash management practitioner for several Mae and Freddie Mac to sell their mortgages. As a result Fortune 500 companies, sold cash management services for there are now just three main lenders: Wells Fargo & Co., major banks and served as a consultant to bankcard acquirers. Bank of America Corp. and JPMorgan Chase & Co. A Certified Cash Manager and Accredited ACH Professional, Brandes has a Master's in Business Administration from New York Banks have the money to lend; they have sharply cur- University and a Juris Doctor from Santa Clara University. He can tained the supply of money to new ventures and small be reached at [email protected]. 32

SellingPrepaid ANNOUNCEMENTS

Alliance Data call centers achieve certification

Loyalty and marketing solutions provider Alliance Data Systems Corp. reported its four retail call centers NEWS were recognized with the Center of Excellence certification from BenchmarkPortal in conjunction with the non- Fed posts final gift card rule deadline profit foundation Center for Customer-Driven Quality at Purdue Research Park. The Federal Reserve Board issued the official deadline of Jan. 31, 2011, for when prepaid card provid- CardSmith rolls out card ers must comply with rules implementing the Credit for Florida state college Card Accountability Responsibility and Disclosure Act of 2009. The initial deadline of Aug. 22, 2010, was con- Campus card provider CardSmith implemented the sidered too soon for businesses to meet without disrup- Essential Card program for Florida State College at tion. An interim deadline of January 2011 was imposed Jacksonville. Students, faculty and staff can use the ID while the Fed considered public comments on the dead- card on each of the college's 12 campus locations in line. The Fed received two comments, neither from a Jacksonville. prepaid card business. "Both commenters generally sup- ported the interim final rule," the Fed said in its notice Meez Coinz Cards available and so went ahead with issuing the final deadline. at national grocers NetSpend's IPO rakes it in San Francisco-based social networking site developer Meez said its Meez Coinz Cards are now available Despite the recent troubles of its main issuing bank, in Safeway Inc. and The Kroger Co. grocery stores NetSpend Holdings Inc. priced its initial public offering nationwide. (IPO) at $11 per share on Oct. 17, 2010. It began publi- cally trading its stock on the Nasdaq stock exchange the Monitise reveals global platform following day. Reports had the stock rising 18 percent on its Tuesday debut, climbing to $13.49 before closing Monitise PLC unveiled Monitise Globe – what the com- at $13. NetSpend's IPO comes on the heels of action pany called the first global mobile money technology taken by the Office of Thrift Supervision, a federal bank platform. The platform incorporates mobile banking regulation agency, against MetaBank, Netspend's pri- and payment services to deliver financial management mary issuing bank. The OTS told MetaBank to discon- via mobile phone globally, Monitise said. tinue its iAdvance loan program. The program is offered mPayy adds prepaid and payroll services to consumers through NetSpend's prepaid cards. Mobile debit payment network provider mPayy Inc. The U.S. Navy goes prepaid reported that its clients – both consumers and busi- The U.S. Department of the Treasury Financial nesses – can now load funds to, and fund payments Management Service (FMS) and the U.S. Navy reported from, their prepaid debit cards via the mPayy network. the completion of the Navy Cash Stored-Value Card Honors bestowed at Prepaid Awards 2010 rollout across the entire active Navy Surface Fleet. The last implementation occurred on the USS Frank Cable, At the Prepaid Awards 2010 held in London, Oberthur FMS said. Technologies won the Best Prepaid Manufacturer category, and InComm won both the Best Prepaid Product "FMS is excited to assist the Navy with this innovative Distributor and, in partnership with PrePay Solutions, electronic cash management service that virtually elimi- Best Prepaid Gift Program. nates the need for currency and coins aboard ship," said David A. Lebryk, FMS Commissioner. paysafecard expands into U.S.

"With Navy Cash, the Navy has an efficient cash man- Vienna, Austria-based online payment provider pay- agement process, and sailors have more secure and con- safecard indicated its prepaid voucher service is now venient access to their funds." available in the United States. The service provides 33

SellingPrepaid

consumers a prepaid solution for purchases in online will get access to InteliSpend's incentive customers gaming environments. and InteliSpend will leverage its distribution channels to expand its services to Discover card customers, the Brookline gets local currency card companies said. PXT Payments implemented a contactless prepaid MoneyGram signs deals debit card program for Brookline, Mass. The program is designed to offer residents a convenient payment MoneyGram International signed a deal with Vijaya option and to boost consumer spending in the city. Bank to offer MoneyGram's money transfer services in Residents load prepaid cards to pay for street parking 1,173 of its branch locations across India. MoneyGram and for use at local retailers, such as coffee shops and also made a global pact with Ceridian Stored Value hardware stores. Solutions in which Ceridian will provide processing for MoneyGram's "in-lane" prepaid money transfers. SparkBase launches ApproveYourCard.com Additionally, MoneyGram partnered with CashEdge Private-label stored-value processor SparkBase Inc. to integrate their respective money transfer and unveiled ApproveYourCard.com, an online portal that payment services platforms for expanded services. allows SparkBase ISOs to submit and manage custom Furthermore, MoneyGram signed an agreement with card orders in lieu of communicating via fax and email. Online Resources Corp. to offer same-day cash pay- Vindicia named to fastest-growing list ment services from any MoneyGram U.S. agent location to Online Resources billers. Online bill pay and one-time payments provider Vindicia Inc. achieved the Silicon Valley/San Jose Business Three team for Cash Passport in China Journal's Fast 60 list of the fastest-growing private com- Foreign exchange specialist Travelex launched the Cash panies in Silicon Valley. Vindicia said it was the third Passport MasterCard in collaboration with the Bank year in a row that it made the list. of China and MasterCard Worldwide. It is the first Western Union donates MasterCard-branded travel card launched by the three $500,000 to Haiti businesses parties in mainland China, Travelex said. White Eagle signs with Transact Network Through its corporate program Our World, Our Family and The Western Union Foundation, The Western White Eagle (Europe) PLC teamed with Transact Union Co. distributed $500,000 to Mercy Corps to pro- Network Ltd. for end-to-end mobile banking, e-pay- vide training and funding for up to 1,000 small busi- ment, e-wallet and prepaid card solutions. nesses in Haiti. APPOINTMENTS PARTNERSHIPS EB appoints, promotes Causes.com joins Blackhawk's Gift Card Mall As part of its corporate reorganization, Evolution Benefits Inc. appointed Chris Byrd as President and Safeway Inc. subsidiary Blackhawk Network added Chief Operating Officer and promoted Patrick Murphy the Causes.com gift card to its gift card mall selection. to Executive Vice President, and Matt Dallahan to Senior Through Causes.com, gift card recipients can donate Vice President for Strategy and Product Development. funds to charities of choice, such as Easter Seals, the Red Cross, UNICEF, the World Wildlife Fund and CARE. FSV taps Fussell for President IGH, Giftango team for card initiatives FSV Payment Systems Inc. named Steve Fussell to the newly created role of President. IGH Solutions Inc., a card fulfillment house and Taylor Corp. division, entered a strategic relationship with dig- Leonard appointed Coinstar's CPO ital e-gifting company Giftango Corp. to offer virtual and plastic gift card solutions to consumers. Coinstar Inc. hired Mary A. Leonard as its Chief Performance Officer and member of Coinstar's execu- InteliSpend, Discover team tive management team. for product enhancements Mota named SVP at eCommLink InteliSpend Prepaid Solutions and Discover Financial Las Vegas-based processor eCommLink Inc. appointed Services inked a deal to provide both entities a variety Oscar Mota to Senior Vice President of Operations of new services to their respective clients. Discover 34

SellingPrepaid

to oversee such eCommLink programs as the Market Step one of the procurement process involved obtaining Ready program, a turnkey prepaid debit solution. proposals from 12 providers of contactless fare collection systems. With that step completed, the CTA opened the TSYS promotes Pettis to EVP process to more bids, with a Nov. 19, 2010, closing date. Total Systems Services Inc. promoted Allen Pettis to With a new fare system, the CTA is looking to reduce over- EVP for Major Account Relationship Management, to head costs, provide greater convenience for mass transit include TSYS Loyalty and Prepaid, value-added prod- riders, streamline fare payment and reload options, and ucts and debit. expand its fare-card service to include promotions via retailers. The CTA said its current system was installed in 1997 and has reached the end of its lifecycle. The system involves electronic fare cards marketed as the Chicago Card and Chicago Card Plus, as well as mag stripe- enabled transit tickets and passes.

The fare cards are closed-loop, contactless, prepaid cards that are tapped on touch pads at rail station turnstiles Open-loop prepaid and bus fareboxes to initiate payments. The cards are purchased online, by mail, over the phone and in-person part of CTA's new at CTA locations. The cards are reloaded at rail stations and Touch-n-Go touch pads, which are available at over fare system 50 locations across Chicago, according to the CTA.

he Chicago Transit Authority, which oversees The prepaid piece a monthly mass transit ridership of over 40 By instituting an open-loop, network-branded contactless million, said it is moving forward on a new smart card system, the CTA will allow mass transit users T "open" electronic fare ticketing system that to use traditional, network-branded credit and debit cards will utilize contactless credit, debit and prepaid cards. to purchase fares. But the CTA specified it also wants riders to have the ability to use cards not tied to bank accounts. "The prepaid piece is really a supplement to this open fare payment system," said Randy Vanderhoof, Executive Director of the Smart Card Alliance. "It really addresses the unbanked or underbanked person."

A Smart Card Alliance Transportation Council white paper entitled A Guide to Prepaid Cards for Transit Agencies recommended transit agencies work with prepaid card program managers to provide transit cards for unbanked riders through retail and transit locations. The paper said prepaid cards may allow for the fastest implementation of a fare collection system if the transportation agency's chief demographic are riders who don't have access to contactless credit and debit cards.

Vanderhoof said, "In major cities where mass transit is a major part of the community, then those merchants that are currently serving those customers will find some business value in being able to load up prepaid cards by getting those customers into the store… So there's a strong value for the merchants who serve the customers who use the transit systems to participate in these types of prepaid programs." More ties to prepaid

The SCA also suggested that government benefits and student ID cards be integrated into open fare collection systems because it is likely mass transit is important for government benefits recipients and students.

SellingPrepaid

"That gives the opportunity – for the government pro- David Schwartz, Vice President of Product and Corporate grams or the school programs – to fund their entitlement Marketing at Obopay, said the service will leverage programs through the traditional bank networks, or at Nokia's 200,000 retail locations across India, where cus- least put it onto a prepaid card that would be accepted tomers purchase phones and sign up for services. easily for transit rides," Vanderhoof said. As alternative financial service centers, the Nokia stores He added that Washington, D.C., and Toronto are at simi- will become places where Nokia customers can reload lar stages to Chicago in laying the groundwork for open stored-value accounts and pick up funds sent by other fare payment systems, with pilot programs into such sys- Nokia phone users, Schwartz added. "For those that don't tems ongoing in New York and Los Angeles. Vanderhoof have bank accounts, it can become their first financial ser- agrees that one day a traveler will be able to pay for mass vices account," he said. transit rides in Toronto and New York with the same bankcard or open-loop prepaid card. The Obopay/Nokia initiative is part of a nationwide mandate called financial inclusion. The Reserve Bank of India is granting operating licenses to alternative financial Prepaid's service providers, such as Itz Cash Card Ltd., Bharti Airtel and The Western Union Co., to provide the unbanked emergence access to financial services. in India The payments bridge In India's urban centers, ATM providers are expanding report by Financial News Publishing Ltd's their networks, with 40,000 ATMs and 450,000 POS ter- research arm, VRL, characterized the Indian minals now across the country, according to VRL. But prepaid card market as "almost embarrass- the report said a telecommunications network is another ingly small." That description rises out of important infrastructure requirement for the develop- A ment of banking services and prepaid card businesses. Prepaid International Forum data that calculates only 4 million active prepaid cards in India in comparison to the 185 million debit cards in circulation, according to VRL. India is the world's fastest growing market for mobile phones, with almost 95 percent of all phones in India With upward of 600 million potential prepaid cardhold- being mobile, and approximately 57 percent of the popu- ers in the South Asian country, VRL concludes that India lation carrying them, VRL said; that statistic is particular- has an "untapped target audience with huge potential for ly important for the rural areas of India, where 236 million profit." mobile phones have been distributed but only 187 million adults have access to bank accounts. VRL said payroll cards dominate the prepaid card market with a 34 percent share, with travel cards and general- VRL expects this gap to only increase, as millions of mobile purpose reloadable cards holding 24 and 22 percent mar- phones are added monthly. "This is an attractive backdrop ket shares, respectively. Cards used for money transfers for starting mobile banking services in rural India," VRL account for 14 percent, VRL estimated. said. "'Mobile wallets' would bring low-cost banking and remittance services to millions for whom banking services VRL cited ICICI Bank analysis that the Indian prepaid are not readily available or easily accessible." market is expected to grow 75 percent in 2010, from a $2.9 billion market in 2009 to a $5 billion market this year. A With a well-developed mobile telecommunication infra- significant part of that growth will come from the Indian structure in place, an opportunity exists to open "new middle class, which is somewhere between 200 and 300 markets and business opportunities for service providers, million people. banks, mobile operators and merchants," VRL added.

"With sufficient disposable income to spend on goods Schwartz said the discrepancy between mobile phone and services, the middle class is an attractive target for users and bank account holders in India mirrors the prepaid cards," VRL said. global equation.

Financial inclusion ABI Research reported that, by the end of 2010, there will be 5 billion mobile subscriptions worldwide. Mobile money transfer specialist Obopay Inc. is going Meanwhile, the Consultative Group to Assist the Poor after another target, the country's unbanked population, said nearly 3 billion people globally lack access to basic which VRL put at approximately 400 million. In partner- financial services. ship with mobile device supplier Nokia and India's YES Bank, Obopay is piloting a mobile money service with "And so there's a big opportunity to bridge that gap," two main components: bill pay/retail payments and Schwartz said. money transfers.

41 CompanyProfile

Good as it GETs here is no doubt the economic landscape is shifting rapidly. Global Electronic Merchants need to revamp their business plans to stay in business. ISOs and merchant level salespeople (MLSs) need to do the same. Technology Inc. T According to Steven H. Bryson, founder and Chief Executive Officer at Global Electronic Technology Inc., only two types of ISOs will survive in the next five to 10 years: the well-established and the innovative. ISO/MLS contact: Basil Siddiqui GET seems to fit the bill on both counts. The Cypress, Calif.-based ISO celebrat- Channel Manager ed its 10th anniversary, but it is not content to rest on its laurels. With "We grow Phone: 949-380-0345 by helping you grow" as its corporate motto, GET enters its second decade of Fax: 949-861-6900 service with a continuing quest to offer superior customer service and assist its Email: [email protected] clients in growing their operations.

Company address: "ISOs have always focused on strategies that help themselves grow," Bryson 10805 Holder Street, Suite 220 said. "But if they want to survive, they will need to change their focus to help- Cypress, CA 90630 ing their merchants grow." Phone: 888-775-1500 Fax: 949-380-0248 Good karma Website: www.gettrx.com, GET provides end-to-end payment processing solutions, including a virtual www.neverforgottenfoundation.org terminal, multiple payment gateways, an online shopping cart, automated clearing house functionality, and loyalty and gift card programs. It serves a ISO/MLS benefits: range of industries worldwide, both brick-and-mortar retail and Internet- • Competitive splits with 100 percent based. The company caters to a variety of merchant types, so services are lifetime residuals designed to bring value to a multitude of industries, including retail, fulfill- • Immediate online access to track status of ment, insurance, online entertainment, restaurants, hospitality, car rentals and applications, residuals, training, marketing professional services in addition to government agencies and municipalities. materials, etc. • High-risk program While GET's primary focus is the secure processing of POS and web-based • 24-hour approvals transactions, it is also a value-added reseller of custom physical and virtual terminal solutions designed for specific markets. Additionally, GET maintains two payment gateways in order to offer specialized payment solutions to both e-commerce and retail merchants. GET is in the process of rolling out its Karma program, through which a percentage of GET's net revenue goes to the nonprofit charitable organization Never Forgotten Foundation. In addition, the company is building its own payment gateway with customizable shopping cart features and 24/7 customer service.

GET also keeps its eye on emerging trends and plans to launch new programs in the next year. "Green and locally owned business will continue to grow as they have in the past few years," Bryson said. "I also predict that markets that cater to baby boomers, the health conscious, and multilingual consumers will see large growth going forward." Growth through customer care

Customer service takes top priority at GET. Support specialists are recruited from respected technical schools and participate in ongoing training, and the company indicated the turnover rate in its merchant support division is very low, ensuring that a qualified specialist answers each call.

Merchant support is provided 24/7 every day of the year, and support services are set up to ensure cardholders receive immediate answers to transaction 42

ComanyProﬁ le inquiries. GET offers help desk and technical support for as a result of the credit crunch. Bryson believes debit terminals, including virtual and e-commerce payment usage will continue to increase until consumer confidence gateways. It also fields inquiries regarding analysis of in the credit markets is restored. transactions and statements. From the ground up

GET noted that it provides comprehensive fraud preven- Bryson began his payment processing career as the tion and risk management, including proactive charge- Southern California District Manager for a wholly owned back management support. Risk managers continuously subsidiary of Deluxe Data Corp. He then went on to build monitor transactions and chargebacks, alerting merchants a distribution channel for Lynk Systems Inc., opening up to suspicious activity and assisting with fighting charge- multiple offices in the western United States. backs. Risk management and chargeback management services include cardholder support for merchants in Bryson also built operations for RBS Lynk (now RBS ecommerce and subscription-oriented businesses. WorldPay Inc.) and TransFirst before forming GET in June 2000. He established the company to provide robust GET stated it is on Visa Inc.'s list of approved Payment distribution channels, advanced payment systems, supe- Card Industry (PCI) Data Security Standard (DSS)- rior customer service and technical support for all mer- validated service providers and maintains a secure card chant types. data environment, complying with all 12 requirements of the PCI DSS. It also completes an annual assessment by a "Because of how knowledgeable and accessible our opera- professional, PCI-certified company that submits findings tions and support teams are, we have a high merchant to Visa Inc. retention rate of around 98 percent," Bryson said.

The company is developing several webinars, one of The company currently counts a staff of about 50, includ- which helps merchants understand the PCI compliance ing customer service and account executives, and is process. The webinar will encompass what it means to always endeavoring to add proven account executives to be compliant, as well as ways to stay alert and protected the team. from intrusions. The program will be available to everyone via GET's website. Growing sales channels

It's all good In addition to providing what it believes are innovative partner programs that benefit both the company and GET welcomed the challenges of the past 10 years. "As an its partners, GET offers ISOs and MLSs the ability to ISO that prides itself in offering its agents and merchants place high-risk merchants through an extensive network the newest technology the industry has to offer, we have of global relationships. been having a great time at GET developing new products and evolving our services," Bryson said. "Our custom Through its ISO portal, GET's partners have access to gateway with an easy-to-use API has been uniquely pro- the company's training and marketing materials, and ductive for our e-commerce clients." the company prides itself on a history of paying residuals 100 percent on time. Compensation is individualized GET is in the process of developing smart phone appli- and structured to the needs of the agent, with all partners cations that integrate with its gateway for merchants compensated in the form of commissions, residuals, and/ interested in mobile options. "As most business owners or bonuses, GET pointed out. would tell you, oftentimes the most productive products and services tend to also be the most challenging," Bryson "Our partner program is packed with fun, tiered incen- said. "PCI DSS standards are the perfect example of a pro- tives such as terminal giveaways, daily approval bonuses, gram with fruitful benefits like mitigating risk that can, at as well as additional signing bonuses for reaching bench- times, be challenging when a merchant doesn't comply." marks," Bryson said. "Additionally, our ISO portal allows our partners to have synched, communal access to all of The company has seen the industry undergo significant our resources and marketing materials, as well as real-time changes since its inception and expects continued evolu- tracking of their residuals and the underwriting process. tion going forward. We believe in providing our people with the very best. Hungry ISOs can contact us for more information." "The biggest change in the past 10 years has been the globalization of our industry through the use of technol- In today's economic climate, that hunger is almost pal- ogy," Bryson said. "Technology has expanded our reach, pable. "It's important to me that, no matter what the allowed us to become more innovative and has made economic climate may be, we are always giving back the business owners more savvy, forcing some of the outlaws blessings we have received as a result of our hard work," in the processing industry to reform their tactics." Bryson said. "It's my unwavering belief that people should be better in GET's hands." GET has also noticed an increase in the use of debit cards 43

News

cy, to mandate a fee charged in the free market that not TCF Bank lawsuit only denies a reasonable rate of return on investment, but actually requires the rate to be lower than the incremental challenges Durbin cost of providing the service."

Amendment Payment attorney Paul Rianda agrees. "I think from the bank's perspective it's a smart thing to do to try and mini- CF National Bank, a subsidiary of TCF mize the impact of this," Rianda said. Financial Corp., filed a lawsuit challenging the constitutionality of the Durbin Amendment. "The way the law is written it almost says look at exactly T The suit claims Congress included the amend- what it costs to do this transaction, and then that's what ment without hearings in the Wall Street Reform and you're going to be able to charge, versus looking at Consumer Financial Protection Act of 2010, also referred all the infrastructure that's in place and the years' worth to as the Dodd-Frank Act. of development of the infrastructure. It's telling the people who are going to be determining this fee to ignore Under the Durbin Amendment, the Federal Reserve all of that." Board has the authority to cap interchange rates on debit card purchases at a "reasonable and proportional" level About next steps in the case, TCF Lead Counsel, Timothy commensurate with the processing costs incurred by Kelly, of Kelly and Berens P.A., said, "The government issuing banks. The cap only applies to banks with more has a 60-day answer period. We would expect that within than $10 billion in assets. With over $18 billion in total the near future that we would file a motion for a prelimi- assets, TCF qualifies for the interchange fee cap to be nary injunction, and we can't tell you when that would imposed by July 2011, when the regulations are scheduled be heard. We don't know just yet who the judge is going to take effect. to be, but my guess is it would be heard sometime in November, and then the court would rule on it in the nor- Wayzata, Minn.-based TCF is the 47th largest commercial mal course, probably on an expedited basis." bank in the United States and the 12th largest issuer of Visa Inc. debit cards. In 2009, TCF reported over 200 million debit card swipes by 800,000 of the bank's debit card Reaching out to users, representing just over $100 million in debit card interchange revenue. medical marijuana In the 54-page complaint, filed Oct. 12, 2010, under the U.S. District Court of South Dakota, TCF is seeking a dispensaries preliminary injunction against the enforcement of the ith 14 states and the District of Columbia amendment because it "irrationally, prejudicially and ille- on record with laws that permit the sale gally interferes with TCF's activities in a market that has of medical marijuana, and another eight been competitive and open by imposing unconstitutional states awaiting the outcome of proposed limitations on the ability of TCF and similarly situated W legislation or ballot measures that would legalize medi- banks to recover their costs for providing a service crucial cal marijuana, the movement toward decriminalization to bank depository customers." of medical marijuana appears to be gaining momentum. Banks want ability to recover costs However, under federal jurisdiction, marijuana use in TCF alleges in its complaint that the Durbin Amendment any context remains against the law. While the federal "drastically limits the types and amount of costs that a government cannot force states to enact laws identical to bank may recover from retailers for debit transactions" federal laws, or require states to enforce federal laws, the and that "a debit card issuing bank will only be able to U.S. Department of Justice has the authority to prosecute recover 'incremental' electronic processing costs related to individuals and organizations that violate federal laws. a particular transaction," while all other costs of operating a debit card program, which are the bulk of the actual A need for processing services cost, may not be recovered. Despite discrepancies between federal and state laws, a handful of payment processors are approaching medi- "We believe we will be successful in this lawsuit, in which cal marijuana dispensaries. Total Merchant Services Inc case we can go back to square one and deal with this offers free equipment upon signing of medical marijuana thing on an even basis in connection with our competi- dispensary accounts in states where it is legal. tors," William Cooper, TCF Chairman and Chief Executive Officer, stated in a conference call. Direct Bancard Inc. recently introduced a POS system for medical marijuana dispensaries that tracks patients, "It is unprecedented for Congress, or any regulatory agen- 44

News for medical marijuana dispensaries that tracks patients, marijuana, 15 members of Congress, led by Rep. Barney inventory and sales. Until now it was "a straight cash busi- Frank, D-Mass., issued a letter written by Rep. Jared Polis, ness," said Martin Khemmoro, Executive Vice President of D-Colo., to Treasury Secretary Timothy Geithner stat- Direct Bancard. "We've installed many POS systems in the ing, "Legitimate state-legal businesses are being denied last few months in Colorado, California and Michigan. access to banking services, which does not serve the pub- This thing is so new that nobody has come out with a lic interest." good POS solution that makes it a turnkey operation. I think we've done that." The letter also requested "formal written guidance" to assure banks would not be federally targeted for conduct- Merchant payments solutions provider, Commerce Online ing business with medical marijuana dispensaries. Inc., offers branded, prepaid loyalty and ID cards to dispensaries through its Collect Card Services division. The "They were trying to insure that medical marijuana dis- cards can be loaded to any denomination with direct pensaries could have banking services provided to them, deposits made to banks via the Internet or dispensary because there is so much capital involved," said Mike POS systems. Meno, Director of Communications for the Marijuana Policy Project. A need for banking services

Under the Controlled Substances Act of 1970, cannabis "A lot of banks that have to comply with federal law are is classified as a Schedule I drug, which by definition hesitant to take medical marijuana business. I haven't is a drug with "no accepted medical value in treat- heard any updates about where it stands, but the states ment," and it falls under the classification of "new drug," with medical marijuana constituencies have an obvious which requires an Investigational New Drug Application interest in this." and subsequent authorization from the Food and Drug Administration before it can be administered to humans. While, as of this writing, expansion of medical marijuana dispensaries into more states hinges upon ballot approval In May 2010, following several attempts to pass legisla- in the November elections, existing state-legal dispen- tion that would remove federal penalties for medical saries are opening channels with processors and banks 45

News willing to set up merchant accounts. According to the "There is a growing global core of nonbank alternative Marijuana Policy Project, an estimated 586,208 patients payment providers who are specialized in the micropay- qualify for medical marijuana in the 15 states where it's ment needs of online social gamers," McGinnis said. currently legal. "Those playing in the micropayments space for game payments are not satisfied with that particular segment. They are extending their reach into trying to provide a channel Mercator explains for other kinds of payments." growth in From many, one Those competing for leverage with micropayments micropayments, include online game providers, alternative payment providers and social networking companies, McGinnis virtual purchasing said. Collaborations between these different entities are helping to spearhead the evolution of micropayments, recent webinar hosted by Mercator Advisory she added. Group discussed the spread and standardization of new types of online micropayments For example, when Facebook-based games like Farmville happening in line with a burgeoning market first cropped up, the different games offered separate vir- A tual currencies to users to make in-game purchases. for virtual game-based digital content.

In "Social Networks and Consumer Payments: Disruptions "Similarly, every game vendor had to build all the inter- Ahead!", Patricia McGinnis, Director of Banking Advisory faces to attract the largest number of payment mecha- Service at Mercator, described the race between different nisms so consumers wouldn't turn away and not buy the online payment providers to reach a "critical mass" of accessories," McGinnis said. adoption in the online gaming space that will allow them to also reach into mainstream payments. Facebook recognized the problem and developed a single, standardized virtual currency that can be used to buy 46

News accessories in a range of games from different game pro- right hand corner generates one-time-use authentication viders, according to McGinnis. passwords. The card contains a button to push to generate the six-digit display. "It means that all the game vendors just write a single interface … the way that the consumer buys a [widget] is Online banking customers who use the card will enter by paying for it with Facebook credits," she said. "From their account credentials to execute transfers, but once that the consumer's point of view, they buy credits, they have information is validated, consumers will be prompted to only one virtual currency account and they can use it in also enter their one-time passcode. Then, consumers will all the games that are embedded in Facebook." push the display card button to generate a new, six-digit number and subsequently enter that to finalize the trans- The standardized currency can be bought with a wider action. range of payment types than some of the individual game currencies that preceded it, she added. The bank's back-end network is able to validate a consumer's entry because it knows what number a spe- 70-30 split cific card will generate within a given period, according Under Facebook's system, online game providers get 70 to Randy Vanderhoof, Executive Director of the Smart percent of every purchase made within their game offer- Card Alliance. ing, while Facebook receives the remaining 30 percent, McGinnis said. Game vendors are amenable to such a "This is addressing the risk of people having their accounts revenue sharing arrangement because the money from taken over and funds being moved out without their virtual product sales represents 100 percent profit – vir- approval," Vanderhoof said. tual goods cost nothing to produce. "It's a much higher level of security because the pass- Within an online game, "another one of those little pink word's only good for a limited amount of time, and the fuzzy sweaters for your white fuzzy poodle – the real cost user has to have possession of the card along with other to produce this content is nil," she said. "That's not true as credentials at the same time." you move into the physical world of e-commerce." Bank of America Corp. unveiled a product last year, called Also spurring the growth of micropayments is the involve- SafePass, which also uses a card-embedded, chip-generat- ment of alternative payment providers that, as Facebook ed password to authenticate online banking activity. But has striven to do, are making it easier for large numbers SafePass is a standalone product, while SinoPac Display of people to make such payments. Card functions as both an online banking authenticator and a credit card. For example, a company called BOKU Inc. allows consumers to make micropayments by billing payments to Additionally, MasterCard said its card display service is mobile phone accounts, with payments confirmed when faster than authentication services that send text messages users reply to text messages. This is helping extend the to users' mobile phones to verify money transfers and micropayment market – and, particularly, the online gam- other transactions. ing virtual content market – to young people who are less Other uses for display cards? likely to carry credit cards, McGinnis said. Vanderhoof said some companies are considering the use of digital chips on prepaid cards as a way to show a user's New MasterCard real-time balance by generating a new number with each purchase or add-on. credit card He also said the technology might eventually be used with a PIN code that consumers would enter to unlock a card generates for purchasing, although that would require that a small keypad be embedded in the card along with the digital passwords reader.

asterCard Worldwide recently introduced "This is just another way of using chip technology to build a chip-embedded card in Taiwan that additional security functionality in the payment card," functions as both a regular credit card Vanderhoof said. "This along with EMV along with con- M and an authenticator for online banking tactless are all steps in, how do you make that payment money transfers. vehicle and that identity card more secure? All of it is helping move the industry off the dumb, mag stripe, flat The SinoPac Display Card functions the same way a nor- form to something that's more secure, more intelligent and mal credit card does, except a chip embedded in the upper offers more services," he said. 47 TradeAssociationNews

WSAA 2010 a smashing success

f you haven't attended one of the regional acquir- • Does the Future of Payments Include You?/ ers trade shows recently, you may want to add it Remaining Relevant in the Revolution of Change to your to-do list for next year. These ever increas- • Starting an ISO? Laying the Foundation for I ingly popular shows are offered annually in vari- Your Business ous parts of the country. The Western States Acquirers • Mobile Payments – The Future is Now! Association held its annual show Oct. 13 to 14 in La Jolla, Calif., and it was one to remember. After the standing-room only breakout sessions, attendees were treated with a keynote address by Jeffrey Hayzlett, Perhaps it was the beautiful locale, an industry recovering the former Chief Marketing Officer of Eastman Kodak Co. from tough economic times or a bit of both. But this year's and author of The Mirror Test. show attracted nearly 600 participants. Add to this the pleasant surprise of an almost 2:1 attendee to vendor ratio Hayzlett amused and mesmerized the audience with and you have the formula for a successful event. his tales of highly creative marketing campaigns and advice on how to adapt these techniques to the payments Field Guide sets the tone industry. Wednesday began with the popular Field Guide for ISOs seminar. This information-packed four hours was includ- Finally, payments industry icon Paul Martaus ended the ed with registration to the WSAA show. day with his take on the industry and where he sees it heading. As always, he presented his insights with a wry Mark Dunn, founder of Field Guide Enterprises LLC, sense of humor. opened the session and also led the Sales Training Success Attendees, vendors energized session. Other topics were presented by industry notables and included: Attendees and vendors alike were abuzz at the closing reception. Most agreed that this was one of the most infor- • International Acquiring – Carrie Hometh, mative and exciting shows they had attended. PayVision USA • Mobile Marketing – Pal Flagg, Street Savings When asked what he believes attributed to the phenom- • Getting the Most from Your Portfolio Investment – enal success of this year's show, Steve Eazell, President of Harold Montgomery, Calpian Inc. WSAA replied, "I think that it was a combination of things. • Recruiting and Hiring Your Sales Team – Matt In so many ways, it was a perfect storm. Clyne, Direct Connect • Putting Social Networking to Work – Mary "I believe that the economy has shown signs of recovery, Winingham, Wasau Financial Systems Inc. and people were looking for a solid outlet to network and get together. We held it in a great venue – in La Jolla in The day then shifted gears with the opening reception, October – with great hotel rates. A good location is crucial sponsored by Moneris Solutions and Planet Payment, and to the success of these regional shows, and we have always an after party sponsored by iPayment Inc. recognized that.

Breakout sessions stand out "We were coming off of a pretty good buzz that was gener- Not to be outdone, Thursday was packed with education ated from last year's successful show. Plus, we had great and information. Between exciting sessions, attendees marketing this year, we had a fantastic agenda including mingled with the exhibitors. Breakout sessions were held awesome speakers, (did I mention that we were in La Jolla, after the morning's general session offered by a panel that can't stress that enough) and our amazing board created provided the audience an overview on interchange and an incredible show." pending legislation. The next regional show on the calendar is the Northeast Breakout sessions were also presented as panel discus- Acquirers Association's annual winter show scheduled for sions and included: Jan. 25 to 27, 2011. The event is held each year in Mt. Snow, Vt. Exhibitor space and rooms both fill up quickly, so be • Risk Products to Mitigate Your Exposure/ sure to sign up early. More information can be found at Protecting Your Brand and Your Pocketbook www.northeastacquirers.com.

IRS reporting from page 1 CoverStory

overall volume of a given merchant. The MLS may not Merchants are already question that amount because the processor reporting supplying financial consistently confirms it. The agent will now, however, have a means of verifying earnings as a percentage of statements and often merchant volume that is independent of the processor's personal income tax returns reports.

for principals; adding copies Hopefully, MLSs armed with this additional information of these new reports would will not learn uncomfortable truths about this processor reporting. An agent would, no doubt, be disappointed if not materially alter the the true split was materially less than it had been reported burden on new merchants to be. or ISOs recruiting them. Merchant price comparisons

The merchant services industry as a whole has to wonder new law. The purpose of this article is to highlight certain whether the new IRS forms will be used by merchants as aspects of the requirements and their potential impact. a tool for evaluating bids from acquirers competing for their business. No one can predict the future, but it is prudent to study the potential pros and cons of this new law and make Much like enlightened agents, merchants may decide to plans accordingly. The areas affected by the new IRS vastly simplify their shopping for merchant services by reporting requirements likely to be of most interest to asking the simple question: for x dollars received on credit payment professionals include: and debit cards during the preceding years, the cost was y dollars; can another processor make x/y greater or not? 1. Underwriting for new merchant accounts 2. Agent use of 1099-K data to check residual payments This kind of brutally simple price comparison would not 3. Merchant use of 1099-K data for comparison shopping be good for our industry because it does not take into 4. Portfolio valuation for buyers and sellers 5. Bookkeeping integration for merchants 6. Culpability for merchant tax evasion 7. Validation of card companies' reported earnings IRS forms as underwriting tools

It would be highly surprising if acquiring banks did not begin requiring copies of 1099-K filings as part of the underwriting process for new merchant accounts. Indeed, the single form provides more aggregated information than the three months of residual statements that new acquirers customarily request.

Merchants are already supplying financial statements and often personal income tax returns for principals; adding copies of these new reports would not materially alter the burden on new merchants or ISOs recruiting them. There is the hope, of course, that these IRS forms will provide a more reliable picture of the merchant's activity than copies of processor reporting statements. Agent enlightenment

Some ISOs and processors will be apprehensive about their MLSs gaining access to these new forms because, for MLSs (who do not see all the raw processing information for merchants), the forms will serve as a reality-check showing the actual split they are earning as a function of the gross processing of their merchants.

For example, an agent may believe that he or she is earning, when all is said and done, four basis points on the 5252

CoverStory account the important process of pricing individual line-items of merchant returns in accordance with existing law. services for the merchant in question. For example, Processor A may be, on an aggregated annual basis, more expensive than Processor B; however, Processor In addition, ISOs and MLSs can help B may settle funds faster, have a lower reserve requirement, provide equip- merchants ensure their bookkeeping or ment at a lesser cost or simply provide better service. tax software is up to date and can fully utilize all transaction data, particularly We hope the new IRS forms will not be used simplistically by merchants to when it comes to merchants' charge- shop on the basis of the aggregated cost of funds alone. Given that the report- back, return and refund reporting ing does not include chargebacks, returns or refunds, it would also be impos- to provide additional information to sible to ascertain a merchant's true nature without looking at much more than the IRS to offset gross receipts that the IRS forms. will be reported by acquirers under the new regime. Quick, independent portfolio valuation Tax evasion not A Holy Grail of our industry is the evaluation of portfolios. We expect that so easy anymore some merchant services industry investors may draw on the new IRS forms as a way of obtaining raw data on a portfolio. I once read about a POS software company that would provide a large restau- The IRS forms, together with a sense of how the merchants in a portfolio are rant with two sets of books: one for the spread across standard industrial classification codes, could be a powerful set tax authorities, and one that was hon- of multiples that help the decision-making of investors or buyers of merchant est. These kinds of shenanigans with services portfolios. numbers will not be so easy under the Bookkeeping integration as a value-added service new IRS reporting regime.

Change is always best seen as opportunity. With this new reporting require- Here are a few examples of how dis- ment, opportunity exists for acquiring organizations to make sure their mer- honest merchants may try to continue chant customers are fully aware of the new reporting requirements and are evading taxes under the new regime: keeping precise records of their income for the purpose of completing their tax • Accept fewer credit cards and accept more cash • Urge clients to write checks that are converted into ACH transactions and thereby bypass the credit card/debit card 'bucket' • Split credit card receivables of profitable businesses into accounts of businesses that are less profitable, thus scooting under the IRS reporting minimums of $20,000 and 200 electronic transactions conducted annually, or at least lowering the gross receipt total for the primary business.

This last route is one that sales organizations should be looking out for. For example, a restaurant asks for two merchant accounts instead of one. The second merchant account is for a business unrelated to the restaurant but the merchant, nonetheless, wants a terminal for that second business in the restaurant. This is obviously suspicious.

Incidentally, to the extent that the second account would be used to process restaurant receivables, it would be doing so in breach of the Visa Inc. and MasterCard Worldwide rules that pro-

CoverStory hibit one merchant from processing transactions for another. Check on Visa and MasterCard earnings To the extent that an ISO is complicit in designing a scheme by which a mer- statements chant can dishonestly divert credit and debit card receivables across various accounts that are unrelated to the actual business, the IRS may find that ISO to Assuming the U.S. Department of the be partly responsible for fraud. Treasury uses the aggregated results of all these new IRS forms to give an Note that with the advent of the cash advance business, ISOs are already open- annual statement of spending levels at ing up new merchant accounts for purposes that are not strictly merchant- merchants via credit card, debit card services related. ISOs should therefore be careful not to go one step further and and third party-based electronic pay- assist merchants in committing tax fraud. ment, that information will serve as a powerful comparison tool when investors analyze the earnings statements of Visa, MasterCard and other publicly traded payment businesses.

In short, one could perhaps break up the aggregated data from the Department of the Treasury and that of the major processing companies to get a vague sense of market share, pricing and trends. People who enjoy crunching numbers will have a new set of inputs to work with. The new IRS reporting requirement should not come as a surprise to anyone. With the enormous volume of credit and debit card receivables, it is only natural that merchants should have to report on them. Some good news

There is no way to avoid the IRS reporting requirements bearing down upon us. But there are ways for you, as ISOs and MLSs, to put this new development into your merchant services tool arsenal.

While being aware of possible threats to your competitive position in the merchant services marketplace, you can use this as an opportunity to educate merchants about how they can use the reporting to enhance their business practices and to help ensure they do not run afoul of the IRS. Doing so will, at the very least, make you look good, which could mean happier customers and a stickier portfolio. In publishing The Green Sheet, neither the author nor the publisher is engaged in rendering legal, accounting or other professional services. If you require legal advice or other expert assistance, seek the services of a competent professional. For further information on this article, email Adam Atlas, Attorney at Law, at [email protected] or call him at 514-842-0886.

58 Education StreetSmartsSM Proudly presented by Eureka Payments LLC

What the feet on the street need from acquirers

By Ken Musante Education index Eureka Payments LLC n March 2010, I left my long-time employment Peggy Bekavac Olson ...... 62 with an acquirer to join a street level ISO. I have Tim Cranny ...... 64 since learned much about acquirers. For example, Jeffrey Shavitz ...... 68 as a merchant level salesperson (MLS) and cus- I Jeff Fortney ...... 70 tomer of acquirers, I find that acquirers openly share their contracts and processes with me. Acquirers are under- Gary Palgon ...... 72 standably reluctant to share compensation strategies or service details with other acquirers. merchants, so I'm concerned about the service provided Further, street-level ISOs do not communicate certain my merchants and longevity rather than the speed for things with acquirers. And street-level ISOs are much approval. However, if you could list your three top priori- closer to merchants. They get a better read on the mer- ties for an ISO, what would they be, and why? chants' pulse and perspective than acquirers. "Acquirers tout their pricing and automation in However, acquirers obtain information directly from the their advertisements, but I'm more concerned about card networks and processors. Street-level ISOs and MLSs their ability to accept a wide variety of POS systems and rely on acquirers to announce and explain changes but VARs. I need to accept every type of merchant, and I typically do not get information directly from the card need many different wireless options. Though speed for brands. We are dependent on The Green Sheet and the approval is important, I'm more concerned about the pre- Forum to confirm industry changes and validate details. dictability of the response time so I can manage customer expectations. My lengthy experience as an acquirer and my tenure as a street-level ISO position me uniquely to understand how "My three, and in this order, are: 1. Do what you say when acquirers could best serve my current brethren in a way you say it. 2. Respond to all my merchant inquiries within that is efficient and profitable for all. 24 hours or less. 3. Don't change the fees to my merchants Ideal acquirer attributes without my consultation." Effective communication To find out what other MLSs believe are critical service strategies, I posted the following on GS Online's CCGUY chimed in first by posting, "1. Acquirers need to MLS Forum: understand that MLSs focus on sales and retention. 2. Answers need to be provided on any application submit- "Since joining a small street-level ISO earlier this year, I ted within 24 hours or less. 3. Any issues with merchants, have gotten a good perspective of what makes a good fees, fee changes, risk issues and closing accounts (need to acquirer. My business strategy is focused on processing be communicated to the MLS), etc. 59

StreetSmarts

"MLSs need to educate themselves on risk and underwriting criteria for the ISOs they submit business to. They need to be the first line of defense in making sure the criteria are met. They should always ask themselves this question first, would I personally take risk on this account?"

"4. Good communication with an 'account rep' and/or respects me as a professional. That would include a con- 'decision makers.' 5. Making sure that the acquirer, from tract that is clear on what happens to my residuals if you the beginning, understands your business and you under- sell your company, and one in which minimums are small stand their business model. or nonexistent among other things.

"You cannot fit a round peg in a small square hole, and if "3. Don't leave important changes out in the way that you they change they need to communicate with you. Having do business that, if I would have known of the change good communication is of the utmost importance." before I signed, then I likely would not have signed on as an ISA/MLS with your company. 4. This is the technology Responsible actions business, technology changes, how are you making sure FASTTRANSACT agreed that communication is key and that we are on top of important changes. that turnaround time is important. "On the other hand, with the increase of fraudulent merchants and unprof- "5. Have a system such that you don't accept (board) itable accounts being submitted, which is better?" she 'unprofitable' deals, and if you are finding that the people asked. "Approve the account within 24 hours, do due that you have welcomed as partners continue to send you diligence and then shut merchant off two weeks later, or those type of deals, retrain them, let them go or at least take the time to properly underwrite an account – say have a 'come to Jesus meeting' with them. turnaround is 72 hours?

"MLSs need to educate themselves on risk and underwriting criteria for the ISOs they submit business to. They need to be the first line of defense in making sure the criteria are met. They should always ask themselves this question first, would I personally take risk on this account? If the answer is no, then walk away.

"MLSs focus too much on what is in it for them rather than what is in it for us (us meaning the MLS/ISO relationship).

"So my wish list would be: 1. Better educated MLS. 2. Better communication between the ISO and the MLS in a two-way street environment. 3. Honoring the contract – merchant and agent – again in a two-way street.

"Then, of course, there are the ISOs who don't give a fly- ing hoot about their merchants and/or MLS and are in it just to line their own pockets.

"This whole industry needs to be reevaluated and have some general operating procedures and protocols put in place by an enforcing body. There are too many blind people at the top in all channels, and too many are too busy advancing their own careers without any forethought on the impact their actions will have on the downhill slide." Honest dealings

DEE MALIK listed the following: "1. Do what you say that you are going to do. 2. Have an ISA/MLS agreement that 60

StreetSmarts

"Once I lose trust in the partner that I have signed on And, last but not least, if you sell your portfolio, what with, it cannot be regained." DEE MALIK further pointed happens to my residuals?" out that MLSs should also behave in accordance with his list and this type of behavior should be the norm, not I agree with CLEARENT. Signing with a sub-ISO or any the exception. entity not directly contracting with the bank is more apt to lead to problems than if you were to sign directly with Wise partnerships a bank or an ISO directly connected to a bank. CLEARENT provided important points to consider. "Make sure you are signing with a processor/acquirer," he To add to this article, I spoke with my long-time friend, advised. "If you are not doing so, make sure you know Xavier Ayala, Vice President and Director of National everything about the relationship between your chosen Sales and Marketing at Moneris Solutions. ISO and their acquirer/processor. He observed that many MLSs don't properly plan before "Too many times I have seen people get everything they contacting acquirers; consequently, it is often a bad fit wanted with their ISO, only to discover (sadly) that their because the MLSs have not first defined what is impor- ISO's relationship with their acquirer/processor allowed tant to them to eliminate processors that don't meet their for changes or treatment that prevented the ISO from basic requirements. honoring their commitments, and often it wasn't because of anything the ISO said or did. Before interviewing acquirers, MLSs should create a list of services they are seeking and a separate list of "So … ask questions, and add that one simple question: attributes they wish to avoid, as well as develop a clear 'Define your direct relationship.' … Then ask, what hap- business plan so they are in a position to best compare pens if interchange goes up or down; if your acquirer acquirers. raises their fees; if you don't make your minimum production; if [there is] any instance where you can have Ayala added that you should not put all your eggs in one your residuals held, and what that would be; if you have basket because, even if you have found the perfect acquir- liability, what happens to a loss and its effect on me. ing relationship, things could change, and you must be able to adapt.

Finally, he stressed that the more an acquirer focuses on relationships, the better a partner the acquirer is likely to be. Representatives at your acquirer should focus on helping to get things done when you need them.

While it's hard to define a "relationship driven acquirer" by using a punch list, it is clear that relationship building that includes advocating for MLSs and their merchants is a critical attribute. Disturbing realizations

I was surprised to learn how patently one-sided some acquirer contracts are. Some required exclusivity; others required the MLS to represent actions the merchant would take; others required a noncompete clause. When I mentioned this to a long-time MLS, he revealed that all he ever looked at was the pricing exhibit.

This may explain why acquirers advertise their pricing instead of their service or contractual terms. Acquirers don't get credit for having transparent contracts with high service standards; these attributes are not sufficiently appealing to generate inquiries from agents.

Please share your thoughts and ideas for the next article. Until then, when in doubt, sell something. Ken Musante is President of Eureka Payments LLC. Contact him by phone at 707-476-0573 or by email at [email protected]. For more information, visit www.eurekapayments.com.

Education (continued) Content marketing delivers by engaging prospects By Peggy Bekavac Olson articles and information versus an advertisement Strategic Marketing (80 percent) • Find that content marketing makes them feel closer to y company creates marketing materi- the authoring company (70 percent) als for clients who are payments industry players just like you. We generate • Say company content helps them make better product M advertisements, brochures, presentations, decisions (60 percent) press releases, promotional emails, white papers, quick reference guides, webinars, blogs and other materials for This means prospects and customers can look forward our clients. We've found it's far too easy for companies to receiving content marketing and actually spend time to spew content created off-the-cuff, but to be effective, reading it to increase their knowledge to make better buy- marketing must address customers' wants, needs and ing decisions. pain points head-on, while keeping content fresh across a multitude of delivery channels. Buyers are looking for information that solves their problems, not an immediate sales pitch. The credibility and Traditional versus content marketing authority that content marketing creates eliminates buyer resistance, while introducing your company and the ben- Traditional marketing is based on interruption methods efits of a specific product or service. that utilize marketing materials and tactics to interrupt buyers' activities to gain their attention and their busi- In a nutshell, content marketing builds trust and rapport ness. Examples of interruption marketing are promotional with prospects and customers, while making it easier for brochures, emails, advertising and sales calls. Content them to justify purchasing from you. So you can create marketing is based on the art of communicating without marketing that is welcome and anticipated, while also selling. It's a non-interruptive method that allows pros- making a strong connection with prospective buyers. pects to choose to view your information. Instead of pitch- ing your company and its offerings, you deliver relevant Six rules of content marketing content that makes potential buyers more informed. Marketo Inc., a leading marketing automation company, The intent is to engage a distinct target audience to drive developed six rules that can be followed to get the most business and create brand loyalty. Examples of non-inter- out of your content marketing efforts. I've modified these ruption marketing include white papers, journal articles, rules slightly and believe content marketing should be: case studies, webinars, blog posts, RSS feeds. Non-promotional: Promotional materials neither Content marketing is the creation and sharing of valuable excite nor inspire, both critical elements of content information, insight and advice on the issues your cus- marketing. tomers and prospects care about – for the purpose of pro- Relevant: Make sure content is pertinent and use- moting your business. Content should not be specifically ful to potential buyers; this trumps conveying your about your business or its offerings, but materials fre- company's mission or message. quently include a mix of pertinent problem-related infor- Insightful: Content marketing should address and mation, industry best practices and thought leader ship. answer a business question or problem; providing information about a meaningless topic doesn't Content marketing should do more than inform and accomplish anything. educate; it should make buyers stop, read, think and then behave differently. Good content marketing inspires and Well written: Poorly written materials yield poor then provokes action. results and may also hurt your company's reputation, so ensure content is presented thoughtfully Why is content marketing important? and error free. Content market ing improves your company's brand rec- Supportive: If content does not support your busi- ognition, image and reputation, which leads to increased ness objectives, it's a waste of time, money and sales and a larger market share. A 2009 Roper Public resources to produce. Affairs Report prepared for the Custom Content Council Substantiated: Some content appears biased when revealed that business decision-makers: it supports your business goals, so make sure you validate your claims through quotes, testimonials, • Prefer to get company information through a series of metrics and statistics. 63

Education

Content promotion • Mention content in other press releases about your business. Good content is not enough. You must distribute it through multiple channels and capture information about poten- • Hold a virtual webinar or live, in-person event tial customers who consume your content. Promotion is about the content. vital: if no one reads what you create, your content mar- • Consider paid promotions like Google AdWords keting efforts will be wasted. Tips for maximum exposure or subscriber advertising in the form of banner ads and effective lead generation include: and emails using pertinent industry journals and newsletters. • Use at least three social media platforms to spread information about your content; cross-pollination The results of content marketing can be tremendous is the key. when you deliver information people actually want. You • Use blog posts to share key lessons and takeaways begin developing relationships with people who care so readers quickly understand the value of your about your marketplace and industry and who may ben- content and request to access the entire material. efit from your company's products and services. Content marketing creates sales leads, drives web traffic, promotes • Create a content landing page with a contact reg- your brand, and educates customers and prospects about istration form (name, company and email address) the reasons to buy. Here's the bottom line: better content and link it to the rest of your website. marketing equals better results for your business. • Develop a banner ad about your content and use it Peggy Bekavac Olson is the founder of Strategic Marketing, a on your website's home page. full-service marketing and communications firm specializing in • Let industry bloggers, press, analysts and consul- financial services and electronic payments companies, after serv- tants know about your content so they can share it. ing as Vice President of Marketing and Communications for TSYS • Utilize email database campaigns to deliver content Acquiring Solutions for more than five years. She can be reached to prospects, customers and key industry players. at 480-706-0816 or [email protected]. Information about • Create and distribute a press release about your Strategic Marketing can be found at www.smktg.com. content. 64

Education (continued) Going beyond PCI Facts about cybercrime The recently released CA Technologies report, State By Tim Cranny of the Internet 2010, (available at www.ca.com/files/ Panoptic Security Inc. SecurityAdvisorNews/h12010threatreport_244199.pdf or by searching online) offers an update on "what's happening he Payment Card Industry (PCI) Data out there" in the world of cybercrime and is a good place Security Standard (DSS) is expanding and to start. maturing. That means ISOs, banks, merchant level salespeople and merchants must famil- T The bottom line is that cybercrime continues to grow more iarize themselves with an increasing number of resourc- common and serious while cybercriminals are becoming es, documents, processes and procedures associated more professional. Not that long ago the archetypal hack- with PCI. er was a teenager looking for adventure and recognition among peers, not necessarily a monetary payoff. That's good in almost every way, but it introduces a very real danger, one that is already affecting people today: Now a hacker is much more likely to be a member of an the possibility of becoming "captured" by PCI and its organized criminal group using specialized training and priorities and processes and forgetting that it is, and will tools for financial gain. always be, just a response to the underlying threats and real dangers out there. Some of the details in the CA report are surprising and show how the web and cybercrime are evolving. As compliance becomes a more familiar process, orga- For example: nizations run the risk of forgetting about the differences between safety and risk, and getting hypnotized into • Far more than viruses, Trojans are the most preva- thinking only in terms of PCI and its issues and formal lent category of threat, accounting for 73 percent measurements. of the total threat infections reported to CA around the world. A Trojan is a program that claims to do (This problem didn't emerge with PCI, of course; it something useful with offers like, "Try this free is a common cause of failure for any long-term pro- accounting software," but it actually attacks users. gram with hard-to-define or shifting objectives. For example, there has been a problem for years in the U.S. Many of the latest Trojans are specifically designed education system, whereby the ultimate goals of pro- to steal data, and the single biggest focus of these ducing educated, informed graduates is giving way to attacks is online banking, accounting for 29 percent the more tangible metrics of raising exam scores and of the new "infostealer" Trojans. graduation rates. This is how we end up with dangerous and completely backward approaches such as "teach to • Because security is all about the "arms race" the test.") between the good guys and the bad guys, it is always true that anything that the good guys do The formal PCI system does not, and cannot, track per- will be circumvented, distorted or even actively fectly or even consistently the underlying dangers from exploited by the bad guys. hackers and thieves. In fact, there are strong reasons (which I'll address in a separate article) why PCI is par- For example, users are becoming more security ticularly bad as a tracking mechanism. conscious, so attackers are exploiting that by pack- aging their Trojans as fake security software (fake The result is that we will see increasing numbers of cases anti-viruses that actually attack your computer and in which people follow PCI guidelines judiciously but are issue fake security warnings to make you hand still hacked or damaged. over personal data). If you're an ISO, bank, processor or merchant, do not • Ninety-six percent of Trojans are components of a smile when you hear the phrase, "The operation was a larger underground market-based mechanism that success, but the patient died"; you could be the patient CA calls "Crimeware-as-a-Service." This empha- we're talking about. sizes that cybercrime is an organized industry, not a loose collection of individuals. For that reason, I'm going to ignore PCI for the rest of this article and talk about the real threats and dangers you (On a side note, it's more than a little bizarre to see should keep in mind. This has to be a regular process, this sort of crime become almost boring nine-to- too, because these threats and dangers are changing so five work: The people doing this aren't living a life rapidly that the right approach today is likely going to be filled with speedboats, machine guns and exotic woefully inadequate in a year's time. drugs. They're now occupied worrying about

Education (continued)

Microsoft technologies remain a huge and consistent source of security problems.

quality control, search engine rankings, affiliate Recommendations programs, multiple language support and other mundane concerns.) So what should we do about all this? Here are some general ideas that should influence both how you think about security, and what specific actions you take. • The favorite target of attacks is gradually moving away from Microsoft Corp. Windows systems • Do not use the PCI DSS as your only guide. to Internet-based solutions. For example, there is Security threats are evolving and shifting much steady growth in attacks aimed at sites such as faster than the PCI Security Standards Council can Facebook and foundational technologies such as respond. If you use the PCI as your sole guide, Adobe PDF and Flash. you'll just be getting ready for yesterday's threats by the time tomorrow ends. Having said that, various Microsoft technologies remain a huge and consistent source of security Instead, be PCI compliant, but keep looking for problems. An enormous number of attacks focus guidelines like the CA report and alerts from gov- on ActiveX, Internet Explorer and Microsoft Office. ernments and software vendors.

• Not too surprisingly, the Internet is not just the tar- • Use the PCI as a good place to start your thinking get of attacks; it is the highway that these attacks about security, particularly if you haven't done use to get to you, corresponding to 86 percent of much about this to date. Think of it more as a the attacks, up 8 percent year over year. first draft of what your minimum set of standards should be, not as the sole definition, and certainly don't think of it as the maximum you should be doing.

• Recognize that the threats are constantly ramping up, so you have to ramp up, too. If you don't, the price you pay will be far higher than the cost of diligence. One comment that security professionals hear all the time from companies that have been hacked is, if only we had (fill in the blank).

• Implement and maintain a comprehensive security program; don't just rely on a single product or solution. Security is too complicated and broad an issue for you to be able to "make it go away" with one purchase, even an expensive one. Also, be aware that the cost of doing business in the mod- ern world has to be paid with time and attention, as well as money.

Thinking about security in this way means you will be safer. It also means PCI compliance will easily follow. That's how it's supposed to work: PCI is essentially a health check, and the best way to pass a health check is to stop thinking about the test so much and concentrate on getting healthy. Dr. Tim Cranny is an internationally recognized security and compliance expert and is Chief Executive Officer of Panoptic Security Inc. (www.panopticsecurity.com). He speaks and writes frequently for the national and international press on compliance and technology issues. Contact him at [email protected] or 801-599 3454.

Education (continued) Where is our Differentiate yourself Our business is not going away. Bankcard usage (both industry heading? debit and credit) continues to grow, and merchants, although they do not like the accompanying interchange By Jeffrey Shavitz fees, must continue to accept all forms of plastic payment. Charge Card Systems Inc. As in any competitive business, the payments industry is lease note that I do not have a Magic 8-Ball experiencing decreasing profitability. To make the same (actually all of my three children have one or even more money, we all need to open more and more and it always says, "Ask again later," no merchant accounts. This is a pretty obvious tactic, but it's P matter how many times you shake it) to not an easy task to accomplish. consult regarding our industry, but I do frequently get asked about the future of our business from salespeople In my opinion, it's all about scale and leverage, and a mer- already in the payments industry and others considering chant level salesperson (MLS) can still exponentially grow entering it. his or her business. Fortunately, this strategy has worked for my company, as many of our sales partners continue Here's my simple answer, and then I'll elaborate on it in to develop prosperous careers. greater detail: I don't know. How's that for honesty? As an owner and manager of a company, I often receive this Become an expert in the nuances of our business. question at our staff meetings, and my employees are Traditional credit card processing has become so competi- looking for a sound, smart response to this simple, yet tive that you really need to differentiate yourself, through incredibly difficult-to-answer question. ways beyond just flashing a great personality. Learn something so valuable about our business that merchants But I can offer tips that could help those wanting to enter want very much to buy from you. or remain in our industry. There's an adage that customers would rather pay "a fair price to an incredible salesperson" than pay "the lowest price to an average salesperson." Think about your own experiences and reflect on the truth of this statement.

Of course, you must charge a competitive price, but I can and have charged more basis points than my competitors and still won the business because of exemplary service. Target small to mid-size merchants

Pick your sales channel. When we started our company, we only solicited Fortune 250 companies and very large private companies processing in excess of $5 million per month. While we have successfully closed many large merchants, I believe the future of the MLS is in small to midsize merchant processing at less than $100,000 per month.

Why? I'm not suggesting you should give up on these larger opportunities, but the margin compression is tight, and banks have chosen to "give away" interchange to win the banking relationship.

On the other hand, profitability still exists in the small to midsize merchant arena, where there is opportunity for us to act as payment consultants while developing a profitable partnership. Stay current

I would be naïve not to mention the power of technology in this article. Stay current on trends so that you can sell appropriate services and terminals to your merchants, 69

Education whether it is wireless or mobile processing on a smart phone (iPhone, BlackBerry or others). Think creatively. To continue being successful in MLSs say to me that the industry was so much easier 10 years ago when interchange-plus was not common and our space, think out of the we could earn significant money on leases. Get over it. As box. I know that is a trite Darwin said, it's "survival of the fittest." expression, but it is true. Five years from now, people entering the payment space will say how easy it was in 2010 to make a living. Just go neur in our profession. If you want to have a structured out there and sell, provide a good service, be fair to your day, stop selling merchant services and get a job. merchants, and you can build a great business. There is a big difference between a job where you earn a I have many friends who are just now choosing to enter salary and a sales opportunity (that we are all so fortunate our space; they wouldn't be doing so if they didn't believe to have) where you can create your own future. opportunities existed. And, if you truly are negative about our business and its future, find a new career. Think I hope I have answered the question about our future. creatively. To continue being successful in our space, Nobody really knows what the future holds, but I'm think out of the box. I know that is a trite expression, but excited to be part of the payments industry journey. it is true. Jeffrey Shavitz is one of the founders of Charge Card Embrace your inner entrepreneur Systems Inc. He is also an active member of The Green In life and in business, success exists largely in the Sheet Advisory Board and the First Data ISO Advisory Board. unknown – especially for the entrepreneurial salesperson. He can be reached at [email protected] or Embrace the excitement of the unknown. 800-878-4100. For additional information on CCS, please visit www.chargecardsystems.com/gsadvisoryboard or the company's The unknown is why you chose to become an entrepre- corporate website at www.chargecardsystems.com. 70

Education (continued)

could weaken them or destroy them, like Superman's Become a payment kryptonite.

superhero As I grew older, the lure of comic book superheroes faded, By Jeff Fortney but I retained insights about identity found in the comics of yore. Like superheroes, people are classified by the Clearent LLC roles they play, not their true or "secret" identities. And was introduced to comic books when I was eight while external identity is largely a matter of how one is years old, and those popular culture mainstays cre- perceived by others, it can be what a person chooses it ated a bond between my friends and me through- to be. I out our elementary school days. We would avidly Beef up your sales identity discuss recent editions – and even share them so we wouldn't each have to buy every issue that came out. As ISOs and merchant level salespeople, your external identity is crucial (The 50 cent price tag was more than a typical weekly to your customers and prospects, allowance at the time, so this was an early lesson in the and to succeed, you must be value of sharing.) their superhero. Fortunately, this identity is something you We were into Superman, Batman, Captain America (my can shape. favorite) and the like. We would pretend to be our favorite characters, and as such, would save the world. For pre- To do this, realize that your teens, that seemed like a reachable goal. external identity is a role like any other you play One constant in all superhero comic books was that each in your day-to-day life. hero had a closely protected secret identity, which was Don't let your successes in constant jeopardy. They each also had something that or failures at work affect your secret identity. Protect your true self (your Clark Kent) while playing your superhero sales role.

You won't, of course, see through walls, but you can project strength, knowledge and other abilities that exceed those of your competition.

Projecting strength does not mean you can bend iron bars. In the sales world, strength is projected when someone demonstrates self- confidence. You must be confident in what you say and do.

Confidence is demonstrated by how you present yourself. The key to projecting the right level of self-confidence is respect. Treat all merchants you come into contact with as true equals. Be attentive and friendly.

(If you feel the only value you derive from merchant relationships is the signing of their accounts, your prospects will sense this. It could also cause you to project a desperate air.) 71

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So respect your prospects first, and you'll receive respect of the industry. If you aren't taking time to learn in return. Knowledge is not conveyed by spewing facts something new regularly, now is the time and figures. Nor is it demonstrated by showing you know to start. more than a merchant knows. Your processing partner should help you gain the Knowledge is demonstrated in two ways: knowledge you need, as well as help you learn more about any topics you're not as familiar with. 1. Confidently knowing and providing the answer If your partner isn't helping you learn and grow, to questions asked find one who is. 2. Confidently admitting when you don't know the answer Indifference: Indifference is often simply avoid- ance, and this projects a lack of skill. Simply put, You must also address underlying ques- returning calls in a timely manner, doing what you tions merchants care deeply about but do say you'll do, giving realistic expectations, moving not ask. To do that, listen closely so you quickly and showing merchants how important can recognize the real issues. they are to you are what you must do.

Ability is not projected by words, Payment superheroes do exist. And they earn a very good but by deeds. It is demon- living. They weren't born superheroes, though. They strated when you accept became the stuff of legend by taking the right steps pro- a merchant's application fessionally, protecting their inner selves and by avoiding and explain the next their kryptonite. steps to completion. It is demonstrated You can do it, too. by being in constant Jeff Fortney is Director of Business Development with Clearent LLC. contact with the mer- He has more than 12 years' experience in the payments industry. chant throughout the Contact him at [email protected] or 972-618-7340. boarding process, as well as after the merchant has begun processing.

Ability is also shown by how you han- dle stumbling blocks that arise over the course of a relationship. The speed of your responses defines ability in this instance – often more so than the actual results. Know your weak spots

You must also be able to recognize your kryptonite, meaning characteristics that can cause you to fail. All superheroes face some form of kryptonite. In the payments world, kryptonite comes in three flavors: arrogance, ignorance and indifference.

Arrogance: There is a fine line between confidence and arrogance. Arrogant actions make one person feel inferior to another, either directly or indirectly. Showing even the slightest degree of arrogance can guarantee you won't sign a merchant – no matter what you say or do. The safest way to avoid exhib- iting arrogance is to admit when you don't know the answer to a question, and then tell the merchant the steps you'll take to help him or her find the answer.

Ignorance: Ignorance is not a lack of knowledge. Ignorance is acting as if you know everything. Nobody truly knows everything, so don't pretend you do. To thrive you must have a basic knowledge 72

Education (continued) What PCI DSS 2.0 means for financial institutions By Gary Palgon more flexibility for achieving compliance by allowing nuBridges Inc. the use of emerging technologies to meet data security regulations. participated in the PCI Security Standards Council's (PCI SSC's) 2010 Community Meetings in North The cost of achieving and maintaining PCI compliance America and Europe, where the 2.0 updates to can be high, and the merchant community will wel- the Payment Card Industry (PCI) Data Security come anything that brings down the cost. This, in turn, I helps to lower the risk upstream to the financial institu- Standard (DSS) and the Payment Application (PA) DSS were presented. This article provides my perspective on tions. New technologies like data tokenization, point-to- how the updates will benefit financial institutions. point encryption (P2PE), Europay MasterCard and Visa (EMV) and virtualization all play a part in reducing com- Version 2.0 updates to the PCI DSS and the PA DSS pliance costs. bring no major changes in requirements, a sure sign these security standards are maturing. The 2.0 updates For example, data tokenization and P2PE reduce the cost devote significant new text to clarifying the standards, of compliance by taking entire systems, applications and which should help resolve many compliance questions, databases out of scope for compliance and ongoing annu- though there's still room for improvement, as the PCI SSC al audits. These technologies limit areas where cardholder itself admits. data exists thereby lowering the risk of a data breach and simplifying and speeding up the auditing process. Progress being made Commitment to data security Still, these clarifications are a step in the right direction and will ultimately help financial institutions reduce The PCI SSC is so dedicated to paving the way to the adop- their risk and achieve greater data security for cardholder tion of new data security technologies that it has com- information throughout the credit card supply chain. mitted to publishing a series of supplemental guidance papers. The first two of these papers, PCI DSS Applicability As a growing number of high-profile, headline-grabbing in an EMV Environment and Initial Roadmap: Point-to-Point incidents demonstrate, sensitive customer data in loan Encryption Technology and PCI DSS Compliance, were pub- applications, credit histories, payroll files and customer lished Oct. 5, 2010, and cover P2PE and EMV technologies databases are prime targets for hackers. Cyber crimes and in a payment card data environment. other types of data breaches – stolen laptops, lost flash drives and accidental leakage of confidential records – They were written to help the merchant community subject financial services organizations to a growing list understand how P2PE and EMV help define or reshape of civil and criminal penalties. the cardholder data environment, evaluate the impact of these technologies on PCI DSS compliance efforts and More nuances clarified identify future potential for the technologies. Further down the supply chain, even retailers like Easier implementation Hannaford Brothers Co. that were deemed PCI DSS- compliant have experienced credit card breaches, put- Since there is not a "standard" way to implement these ting financial institutions at risk of having to cover technologies, these and future guidance papers will be unauthorized purchases and the expense of issuing new very useful to merchants who want to incorporate them credit cards. into their data security programs to reduce fraud in card present transactions (with EMV) and reduce scope (with The fact that companies that were deemed PCI DSS- P2PE) in compliance with the PCI DSS. compliant have been breached proves that being compliant doesn't equate to being secure. Clarification of the PCI In a nutshell, the easier it is for merchants to understand standards is meant to help companies better understand how to leverage new technology to improve data security the nuances of the requirements and provide better guid- and the less costly it is to maintain compliance, the more ance on successful data security strategies. secure the supply chain becomes.

Risk mitigation The less risk there is of a credit card breach at the merchant level, the less risk that financial institutions In addition to better clarification, PCI 2.0 continues to will be put in the position of bearing the brunt of address evolving risks and threats and improve align- the fallout of stolen cardholder data. Clearly, this ment with industry best practices. It also gives merchants 73

Education clarification and flexibility will be welcomed by the and clear, and I have no doubt the noise was heard merchant community and will ultimately benefit the by all. Companies and solution providers alike want financial services community. more clarity about the Self-Assessment Questionnaires (SAQs). They want to learn more and learn it faster by The future of the PCI SSC participating in the SIGs. They also want to know how During the September PCI SSC North American to do more around risk-based approaches to address Community Meeting, there was evidence of a great deal vulnerabilities. And they're looking for more training more collaboration among the PCI SSC and the participat- opportunities. ing organizations, Qualified Security Assessors (QSAs) and the American Society for Quality (ASQ). There were concerns about getting the PCI SSC to make more definitive decisions about emerging technology One personal example is the work I have been doing lead- conflicts and how to deal with franchisees, since the latter ing the Tokenization Working Group as part of the PCI don't often recognize the importance of security. SSC Scoping Special Interest Group (SIG). Prior to June of this year, the PCI SSC's Technical Working Group worked Both are valid issues and in time they, too, will be independently from us, resulting in duplicative efforts as addressed. With the support of the participating organiza- we both elaborated on the use of emerging technologies tions, QSAs and the ASQ, we can help them move faster for compliance. by providing input and guidance. Gary Palgon, a Certified Information Systems Security Professional, Since then, we've been working together, which will is Vice President of Product Management for data protection soft- result in the expedited development and dissemination of ware vendor nuBridges Inc. He leads the Payment Card Industry's information about emerging technologies. Tokenization Working Group, one of four working groups in the Effective cooperation PCI Security Standards Council's Scoping Special Interest Group. Palgon is a frequent contributor to industry publications and a In addition, better communication between the coun- speaker at conferences on electronic business security issues and cil and the participating organizations rang out loud solutions. He can be reached at [email protected]. 74 NewProducts Encrypting, entertaining self- service terminal Product: KST9000 Company: Key Innovations Ltd. self-service payment terminal from Key Innovations Ltd. provides point of entry, letter-by-letter encryption of all inputted data, FeaturesFeatures ofof KST9000KST9000 include:include: along with a sophisticated multimedia player A • Sophisticated digital content displayed with eight merchants can customize to display everything from store discounts to local weather reports. buttons for navigation • Digital content created on accompanying software The KST9000 is an unattended terminal intended for program such installations as gas stations, ATM kiosks and • Point of entry encryption used with all entered data automated ticket taking. It turns autonomy into value, • Modular hardware allows peripheral add-ons according to its makers. The terminal comes with Secure Content Builder, a software program that can be used to build a virtually limitless array of digital image and certain buttons are highlighted (through backlighting) as video content. prompts to the consumer, such as for payment. Multipurpose machine Encrypts all entered data

This feature, combined with the terminal's customer The KST9000 encrypts entered data at both the point of facing 5.7-inch display screen, 30 frames per second digi- swipe and point of entry for data entered on the PIN pad tal video capability and a carousel of navigation screens – including encryption of nonpayment data, according to linked to eight buttons, have the potential to make the Coggins. He said many terminals encrypt payment data KST9000 a payment acceptance machine, marketing vehi- but not less sensitive data like ZIP codes, which are often cle and entertainment source rolled up into one product. required for payment at gas station pumps.

The PC-based software is "a video editor that allows you But he believes anything less than an all-encompassing to create the content, which is more or less a PowerPoint, encryption scheme can be dangerous because a criminal the way you build individual scenes and link them to the may trick customers by prompting them – with a planted user with the eight addressable buttons on the display," or hijacked monitor, or even a handwritten note – to key said Ryan Coggins, National Sales Manager for Key in payment data when they're supposed to enter ZIP Innovations. "You can instruct users how to use the termi- code information. And when a consumer obliges, sensi- nal, the field pump or the ATM by presenting them with a tive payment data can be exposed. Data entered in this video. … You can have a Coke ad playing while the pump "clear text" mode presents an opportunity for criminals to is idle; you can tell the customer to press here for coupons, spoof customers, tricking them into entering PIN codes, here for weather and here for local traffic." Coggins noted.

Coggins said users of Secure Content Builder can upload It is easy to add ancillary pieces to the KST9000 because their own digital content onto the program or select from it reportedly lacks the constraints of a metal encasement a library of images and videos already on file to fill their or other impermeable hardware. "It's modular – you can terminals' different navigation channels. build your own host panel, put it at the angle you prefer, and put in each piece individually," Coggins said. With The channels can be limited to one or two options for the four USB expansion ports, the system allows for the incor- consumer or expanded to provide things like promotions, poration of peripherals, such as a scanner, a card reader, a couponing, news and entertainment pieces like movie secondary printer and a video camera, he added. trailers. The content is transferred from a computer to the terminal through a USB module. Key Innovations Ltd. 480-699-3119 The terminal also offers what Coggins called "user-defined www.key-innovations.com illumination," meaning the freedom to decide if or when 75 ResearchRundown Smart cards, smart choice • New developments in multiform-factor-capable devices with integrated support By 2012, global shipment of smart cards is expected to grow from 5.5 to 8.5 billion units at a compound annual "Payment terminal OEMs should be thinking about their growth rate of approximately 11 percent, according to next generation products in such a way that their plan- RNCO's Smart Card Market Forecast to 2012. The report ning accommodates a more application-centric paradigm, indicated the shift in liability associated with Europay, where value-added services can provide true differen- MasterCard and Visa chip and PIN technology would be tiation between offerings," stated David Fish, Senior a key driver in bank issuance of smart cards in the future. Analyst, Mercator Advisory Group and report author. For information, visit www.mercatoradvisorygroup.com. The telecom industry leads in smart card issuance in the form of mobile phone SIM cards; however, forecasters see Cloud shift forecast for 2013 increased usage of smart card technology in transportation, the public sector and financial services. For more As more companies shift to web-based applications to information, visit www.marketresearch.com. manage customer relationships, the global market for cloud computing is projected to exceed $25 billion by Over $44 billion lost in transactions the end of 2013, according to a recently published report by Renub Research, Cloud Computing - SaaS, PaaS, IaaS A recent Harris Interactive Inc. Online Transactions Market, Mobile Cloud Computing, M&A, Investments, and survey commissioned by online customer experience Future Forecast, Worldwide. management software company Tealeaf Technology Inc. revealed that online retailers may have lost more The report projected the fastest growth segments in soft- than $44 billion this past year due to retail website trans- ware-as-a-service will be communications and collabo- action problems. More than a quarter of online shop- ration, customer relationship management, enterprise pers surveyed said they would turn to online or offline resource planning and supply chain management. For a competitors if they encountered an issue with an online copy of the report, visit www.renub.com. transaction.

Online shoppers surveyed stated they would react to online transaction issues as follows:

• 66 percent would contact customer service, 53 percent of whom would do so by phone • 36 percent would email or log a web complaint with customer service • 32 percent would abandon the transaction entirely; of those 27 percent would turn to a competitor

For more information about the survey, contact Lara Sasken at [email protected]. Future looks terminal Mercator Advisory Group's The 'World Terminal' - Preparing the POS for the Multi-Form Factor Future explores global terminal vendor acceptance of multiple payment forms ranging from chip, contactless, near field communication and magnetic stripe payment processing.

Highlighted issues include:

• Global movement toward devices that accommodate multiple form factors in any geography • The rise of chip-based payments among nations and multinational merchants • Potential impacts of emerging form factors, such as two-dimensional barcode and biometrics 76

DoYouRemember? 10 years ago in The Green Sheet

Prepaid gets thumbs up Los Angeles-based PayPoint Electronic Payment Systems reported that in the last year the PayPoint prepaid gift card had become a key product in the firm's array of offerings. PayPoint's Sales and Marketing Vice President Fred Coblentz said it gives merchants "another revenue source that's cheaper to process than paper gift certificates and credit cards."

Play ball at the POS U.S. Wireless Data powered the wireless POS terminals at Yankee Stadium during the 2000 World Series.

Open in the air VeriFone Inc. endorsed an "open" environment that allows for multiple application program interfaces on POS terminals because it helps move toward establishing industry-wide application standards, thereby removing the development, certification and support barriers associated with "closed" proprietary environments.

The Green Sheet was 36 pages.

Read archived issues back to 1995 at www.greensheet.com; click on Publications. 77 DateBook

Visit www.greensheet.com/gs_tradeshow_events.php for more events and a year-at-a-glance event chart.

Industry Smart Card Alliance Industry American Conference 2010 Smarts Cards in Government Conference Institute Events and Exhibition Events ACI Emerging Payment Systems

Highlights: The Smart Cards in Government Conference con- Highlights: Financial institutions are finding new and more tinues to grow, reflecting the rapid expansion of government efficient means of using technology to speed up the payment identity and security initiatives. These initiatives have led to the process, and emerging payment products like mobile pay- growing interest in the strategies and technologies that help ments, virtual and digital currencies and merchant payments speed the adoption of homeland security identification and are anticipating tremendous growth in the weeks, months and access and other key government initiatives. years ahead. While these products afford great opportunity for revenue, uncertainties persist related to regulatory, compliance This year's conference features expanded coverage of gov- and security issues. ernment efforts to improve and implement secure electronic medical records and smart card applications with the potential This conference offers a unique opportunity for financial prod- to improve the security and privacy of patient information, uct, payment, and retail professionals and attorneys to gain provide the secure carrier for portable medical records, reduce a crucial understanding of the mobile and emerging payment health-care fraud and support new processes for portable ecosystem and how the key new payment systems fit into the medical records. regulatory framework.

When: Nov. 16 – 19, 2010 When: Nov. 18 – 19, 2010 Where: Walter E. Washington Convention Center, Washington Where: The Westin Washington, D.C., City Center, Washington Registration: www.smartcardalliance.org/pages/news-events Registration: www.americanconference.com/EPS.htm

79 Inspiration

But what is happiness except the simple harmony WaterCoolerWisdom: between a man and the life he leads? – Albert Camus The pursuit The happiness game plan So how do we pursue happiness, especially in the work- of happiness place?

hen Thomas Jefferson penned the for- 1. Decide to spread happiness: Before you begin ward-thinking words contained in the each day, think about the purpose of your work Declaration of Independence, he officially and how it benefits merchants. What can you declared the "pursuit of happiness" as an accomplish today that will bring the greatest W rewards to the merchants you serve? The answers "inalienable right" for Americans, in the same league as life and liberty. will help guide you toward increased productivity and merchant satisfaction, which will lead to An inalienable right cannot be annulled, canceled, over- greater happiness for you. turned or revoked by any authority, as long as the legal activity does not infringe upon the rights of others. 2. Keep it in perspective: This may seem obvious, but you are more than your work. Focus on the Jefferson sent a powerful message to Americans: our tasks at hand, but keep in mind that you can only birthright is to pursue our own happiness. But happiness apply your best effort in each situation. Set the bar is not guaranteed and is often fleeting. What is happiness high, realizing that you will prevail in some but anyway? Merriam-Webster Inc. offers this definition: "a not all cases, which is perfectly normal. Appreciate state of well-being and contentment." your efforts, and end the day with a smile.

Perhaps that's the genius of Jefferson's assertion. We must 3. Associate and delegate: Get to know associ- endeavor to determine what makes us happy. As indi- ates and merchants by taking a personal interest viduals, we have unlimited potential to achieve happiness in their work and lives. Relationship-building is if we commit ourselves to discovering what brings us essential to sales, of course. But it also leads to true happiness. greater satisfaction at work, which leads to – you guessed it – happiness. So learn to delegate so you can dedicate your time building merchant relationships.

4. Get away from it all: Take regular breaks throughout the day. A brisk 10-minute walk can reenergize and offer the lift needed to close the next sale. Beyond daily breaks, schedule recreation and vacation breaks to maintain the delicate life-work (and happiness) balance.

If we make a conscious decision to be happy in career and life, we may just prove that Jefferson's postulation was correct: happiness pursued can be achieved, and once achieved it can't be stripped from us by another. 80 ResourceGuide To add your company to our expanding listing, call 866-429-8080 today.

ACH - CHECK 21 ACH COMPLETE SERVICES EZCheck (800) 797-5302 www.ezchk.com ACH - CHECK 21 BOC

AGENTS / ISO PARTNERSHIPS

ALTERNATIVE PAYMENTS 2000Charge, Inc (800) 466-1481 www.agent2k.net

The Resource Guide is paid classiﬁ ed advertising. The Green Sheet, Inc. is not responsible for and does not recommend or endorse any product or service. Advertisers and advertising agencies agree to indemnify and hold the publisher harmless from any claims, damage, or expense resulting from printing or publishing of any advertisement.

ResourceGuide

ATM BUSINESS DEVELOPMENT AUDITING AND ACCOUNTING

BANKS LOOKING FOR AGENTS

ATM ISOs LOOKING FOR AGENTS

United Cash Solutions (800) 698-0026 x1430 ATTORNEYS

Comerica Merchant Services (800) 790-2670 Group ISO, Inc. (800) 960-0135 www.groupiso.com Redwood Merchant Services Division of Westamerica Bank (707) 569-1127 www.redwoodmercantservice.com BANKS LOOKING FOR ISOs / MSPs America's BankCard Alliance, LLC. (800) 757-1538 Group ISO, Inc. (800) 960-0135 www.groupiso.com Integrity Payment Systems Adam Atlas Attorney at Law (888) 477-4500 (514) 842-0886 www.integritypaymentsystems.com

ResourceGuide

CASH ADVANCE EMPLOYMENT The Phoenix Group LOOKING FOR AGENTS (866) 559-7627 VeriFone (800) VERIFONE FINANCING FOR ISOS Super G Funding (800) 631-2423 www.supergfunding.com GIFT / LOYALTY CARD PROGRAMS Electronic Payments (800) 966-5520 x221 www.epigiftcards.com FLEXGIFT/UMSI (800) 260-3388 HIGH RISK

EQUIPMENT CHECK GUARANTEE / ATT Services VERIFICATION (714) 999-9566 www.attpos.net CrossCheck, Inc. International Merchant Solutions (800) 654-2365 BANCNET (713) 629-0906 (800) 313-2265 x104 EZCheck www.banc.net www.officialims.com (800) 797-5302 National Transaction Corp. www.ezchk.com Budget Terminals and Repair (985) 649-2910 (888) 996-2273 Global Payments Inc. www.nationaltransaction.com (800) 801-9552 Discount Credit Card Supply www.globalpaymentsinc.com (877) 298-6939 HIGH RISK www.discountcreditcardsupply.com LOOKING FOR AGENTS Secur-Chex (866) 464-3277 General Credit Forms, Inc. (800) 325-1158 A.V.P. Solutions www.gcfinc.com (800) 719-9198 CHECK REPRESENTMENT www.avpsolutions.com PROCESSOR LOOKING FOR MLSs Ingenico (800) 252-1140 ISO/POS DEALER NFSdeposit www.ingenico.com LOOKING FOR AGENTS (877) 554-5154 www.nfsdeposit.com JRs POS Depot (877) 999-7374 MSI, Merchant Services Inc. www.jrsposdepot.com (800) 522-3661 www.1800bankcard.com

ResourceGuide

ISO RELATIONSHIPS AVAILABLE International Cyber Trans ISOs LOOKING FOR AGENTS (877) 804-3300 x150 www.cybertrans.com MSI, Merchant Services Inc. (800) 537-8741 www.1800bankcard.com North American Bancard (800) BANCARD x1001 United Bank Card (UBC) (800) 882-1352 (800) 201-0461 www.cocard.net ISOs / BANKS PURCHASING

• BEST RESIDUAL STREAM IN THE BIZ MERCHANT PORTFOLIOS • MULTIPLE PROCESSING PLATFORMS • PRE-NEGOTIATED BUYING POWER • NEXT DAY FUNDING AVAILABLE • UNIQUE EXIT STRATEGY

ABTEK Financial (800) 544-9145 www.abtekusa.com

Elavon (678) 731-5000 www.elavon.com Electronic Payments (800) 966-5520 x223 www.epiprogram.com EVO Merchant Services (800) CARDSWIPE x7800 Elavon www.goevo.com (800) 819-6019 x6 www.elavon.com First American Payment Sys. (866) GO4 FAPS Global Payments www.first-american.net (800) 801-9552 www.globalpaymentsinc.com Global Payments Inc. (800) 801-9552 North American Bancard www.globalpaymentsinc.com (800) BANCARD x1001 Cardready Group ISO, Inc. (888) 398-6001 (800) 960-0135 www.cardready.com www.groupiso.com

ResourceGuide

Electronic Payments Xenex Merchant Services (800) 996-5520 x223 (888) 918-4409 x511 www.epiprogram.com www.goxenex.com EVO Merchant Services ISOs PURCHASING ISOs (800) CARDSWIPE x7800 www.goevo.com First American Payment Sys. (866) G)4 FAPS www.first-american.net Group ISO, Inc (800) 960-0135 www.groupiso.com LEASING

Money Tree Merchant Services (800) 582-2502 x2 www.moneytreerewards.com MSI, Merchant Services Inc. (800) 351-2591 www.1800bankcard.com

ABC Leasing (877) 222-9929 First Data Global Leasing (800) 897-7850 Ladco Global Leasing Solutions (805) 267-7247 www.ladco.com LogicaLease (888) 206-4935 www.logicalease.com Merimac Capital North American Bancard (866) 464-3277 (888) 229-5229 Northern Leasing Systems, Inc. United Bank Card (800) 683-5433 (800) 201-0461 x136 www.northernleasing.com United Merchant Services, Inc. (800) 260-3388

ResourceGuide

MARKETING AND ADVERTISING APRIVA (877) 277-0728 www.apriva.com

POS CHECK CONVERSION CrossCheck, Inc. Global Payments (800) 654-2365 (800) 801-9552 www.globalpaymentsinc.com Secur-Chex (866) 464-3277 ProCharge (800) 966-5520 x221 POS CREDIT CARD USA ePay EQUIPMENT REPAIR (866) 490-0042 New Image P.O.S. www.usaepay.com (877) 581-6201 PAYMENT GATEWAY / [email protected] MULTI - CURRENCY PROCESSING SERVERS / ISPs ATT Services (714) 999-9566 Network Merchants, Inc. (NMI) www.attpos.net (800) 617-4850 www.nmi.com PCI DSS COMPLIANCE

PAYMENT GATEWAY POS SUPPLIES General Credit Forms, Inc. (800) 325-1158 www.gcfinc.com PROCESSORS LOOKING FOR ISOs Clearent (866) 205-4721 www.clearent.com Elavon (678) 731-5000 www.elavon.com

ResourceGuide

WEBSITE DESIGNS / SEO WIRELESS RETAIL / KEYED PROCESSING USAePay (866) 490-0042 www.usaepay.com

Moneris Solutions, Inc. (877) 635-3570 www.monerisusa.com /partnerProgram/iso REMOTE DEPOSIT CAPTURE Gulf Management Systems (800) 947-3156 www.gulfmanagementsystems.com SITE SURVEY Spectrum Field Services (800) 700-1701 x286 www.spectrumfsi.com

94 AdvertiserIndex

1st American Leasing ...... 24 Merchant Warehouse ...... 13 Advance Restaurant Finance (ARF) ...... 20 Merchants Capital Access ...... 70 Alpha Card Services ...... 54 Merchants' Choice Payment Solutions ...... 40 American Bancard ...... 53 MLS Direct Network Inc...... 61 Apriva ...... 73 Moneris Solutions ...... 77 Bank Card Depot ...... 67 National Transaction ...... 75 CardPayment Solutions ...... 12 Netcom PaySystem ...... 45 CardReady ...... 37 North American Bancard ...... 2, 6, 7 Central Payment Corp...... 91 NPC ...... 27 Century Payments/Reliable Payment Solutions ...... 17 Planet Payment Inc...... 59 CHARGE Anywhere ...... 10 POS Portal Inc...... 44 CoCard Marketing Group ...... 11 Reliant Processing Services ...... 87 Credomatic ...... 69 Secure Net Payment Systems ...... 48, 49 CrossCheck Inc...... 65 Spectra Payments ...... 85 Cynergy Data ...... 81 Stream Cash LLC ...... 68 Electronic Merchant Systems ...... 21 Super G Funding LLC ...... 16 Electronic Payments ...... 95 The Phoenix Group ...... 35 eProcessing Network LLC ...... 71 TransFirst ...... 19 Equity Commerce L.P...... 26 TriSource Solutions LLC ...... 22 EVO Merchant Services ...... 29 United Bank Card Inc...... 55, 56, 57 EZCheck ...... 63 Up Solution ...... 15 First American Payment Systems ...... 9 USA ePay ...... 18 GBR Funding ...... 51 Velocity Funding LLC ...... 52 Global Check Service ...... 89 VeriFone...... 50, 83 GRP Funding LLC ...... 60 Hypercom...... 96 Inserts iMax Bancard ...... 38, 39 Charge Card Systems iPayment Inc...... 23 North American Bancard JR's POS Depot ...... 28 Total Merchant Services MaxAdvance ...... 25 Cover Wrap Merchant Data Systems ...... 34 North American Bancard Merchant Implementation Services ...... 66 Business Reply Card Merchant Services Inc...... 93 North American Bancard